i now recognize myself for a

four minute opening statement. good morning treasury secretary scott bessent, welcome. it is an honor to have you here today to provide testimony to the chair of the financial oversight council. we will examine recent actions taken and provide the opportunity to address any questions or concerns regarding the 2025 annual report. economic growth is essential for financial stability. in a growing economy with rising incomes, debt burdens fall, american standards of living rise and the financial system remains stable. it is encouraging to have financial regulators and policymakers who understand this fundamental reality. to foster a regulatory

environment that considers how both new and existing regulation alters and impacts economic growth. committee republicans share the commitment to promoting economic growth through the elimination of unnecessary regulatory burdens, a hallmark of the trump administration. since assuming the presidency just over a year ago president trump has built on this critical work that he achieved in his first administration, made further progress in rolling back overly burdensome regulation that siphons -- stifles innovation and economic growth. these go beyond just reducing red tape. they are about fostering an environment where financial institutions can contribute to the stability and growth of our economy. i would be remiss if i didn't remind everyone in the room today of the doom and gloom economic predictions that we heard across the aisle as the trump administration was sworn in. in the late 2024 and analytics

anticipated that a republican controlled government would bring three, 5% unemployment and a deficit. since then democrats have repeatedly and wrongfully accused republicans of tanking the economy. with most of the official data in the books, these warnings miss the mark. inflation came in lower than forecasted. the unemployment rate never increased beyond 4.5 percent and gdp is on track to have three consecutive quarters about three percent growth. meanwhile the budget deficit is on track to fall to some 5.4% of the gdp. these numbers speak for themselves. under president trump's leadership the economy is back on track reversing the damage of the previous administration. throughout the 119th congress

public and remain steadfast in her goal in reinvigorating the commercial banking system and making life more affordable for milliken families. -- american families. that commitment is why i introduced the mainstream capital access act with andy barr last month. our community banking package is designed to revitalize local bank formation, right sized regulation that is intended for complex institutions, ensure that community lingers can focus on serving families, small businesses and local economies. this bill also aligns with the administration's effort to right size regulation and reflect the commitment during the financial operations. our bipartisan housing for the 21st century attacks housing affordability head on while reducing the burdens, improving

affordability, paired with mainstream capital access, americans will benefit.

>> his administration has

repealed rules that curb excessive credit card late fees and shuttered the consumer financial protection bureau. the very agency that returned 21 billion dollars to americans after they were ripped off. in fact, trump team has dismissed enforcement actions against predatory firms. even after they admitted to defrauding consumers. why? could it be because they gave to trump campaign or bought his crypto coins or could it be this president is not on the side of the american consumer and never has been. it does not stop there. right now trump's justice department is conducting a baseless criminal investigation into jerome powell to bully the

federal reserve so they serve trump's agenda instead of the american people. since trump came back to office republicans have looked the other way while consumer protections were guided. instead of offering solutions to help families, they have protected corporate profits. under this administration billionaires are winning and hard-working americans are losing we have seen this movie before. this deregulation led directly to the 2000 eight financial crisis with millions of americans lost their jobs, their homes and their savings all while wall street walked away with bonuses. despite repeated demands from democrats for accountability, republicans have refused to bring other key administration officials before congress. that includes cfpb, the acting director russel vought, who must

be held accountable for dismantling the cfpb. this includes fha director who has a lawfully installed himself and his staff on the board of fannie mae and freddie mac, weaponized data to track to attack trump's political enemies and who is incompetently pushing plain dumb housing policies. like a 50 year mortgage every term committee democrats and i are standing up for america's consumers, defending strong safeguards, fighting corruption and the corruption of the trump family. it is just common sense. our economy should work for everyone, not just the billionaire circles that trump is involved with. republicans need to stand up to drunk, defend and protect

consumers and put families ahead of wall street. anything else is complicity. >> i recognize the chair of the subcommittee on financial institutions mr. barr of kentucky for an opening statement. rep. barr: secretary bessent, welcome back to the committee. common sense legislation like the mainstream capital access act is exactly the type of progrowth proposal to promote financial stability that was highlighted in the annual report. i am proud to sponsor the community bank regulatory tailoring act that will modernize outdated statutory thresholds that impose disproportionate burdens on our financial system. this committee can successfully support our community lingers and allow them to thrive under right size regulation with this legislation in place. regulatory tailoring helps to protect the diversity of our financial system which is itself

key to promoting financial stability. i look forward to working with the treasury department as you implement my outbound investment legislation that the president signed into law in december. with you at the reins, we have are turned to core values and away from the weaponization we experienced under the biden administration. >> i recognize the ranking member of our subcommittee dr. bill foster of illinois for a one minute opening statement. >> thank you. mark twain is credited with observing that history does not repeat but often rhymes and those of us who served on this committee during the financial crisis recognize this poem and it's tragic ending. we have once again a historically unpopular president, fixated on the glory of foreign bailouts. we have once again a multi trillion dollar asset bubble underpinned by conflicting financial mechanisms that nobody understands.

you can hardly open any financial news source without seeing discussion of the pending collapse of the a.i. circular investment bubble and that is why we created the up stock and that is why last november democrats on this committee said you a letter to figure out what will happen when the music stops. your response was insufficient, dismissive and dangerous to our economy. i look forward to hearing more from our questions. >> today we welcome the testimony of the honorable scott bessent, secretary of the department of the treasury. secretary bessent, we thank you for taking the time for joining us today. you will be recognized to give a presentation of your written testimony. without objection, your statement will be made part of the record. mr. secretary, you are recognized for five minutes. sec. bessent: chair hill, ranking member waters and members of the committee, thank you for inviting me to discuss the financial stability

oversight council 2025 annual report. this report is a culmination of extensive collaboration among members. i would like to thank them for their hard work and dedication in advancing the president's vision for a better america. since day one president trump has focused on building parallel prosperity, an era of economic expansion where wall street and main street can grow together. to that end treasury has pursued progrowth policies to unlock the potential available to all americans when they are free to say, invest, build businesses and drive their own autonomic -- economic destinies. the oversight council plays an important role on delivering on this agenda. too often we have seen regulation by reflex rather than preempting crises, regulators have frequently reacted to them after the fact. they have played the role of a hazmat cleanup team instead of preventing dangerous spillovers in the first place.

regulation by reflex has led to a regulatory myopia that has undermined safety and soundness. under president biden the bank regulators preoccupy themselves with reputation risks, climate related financial risks and other risks with no clear nexus to safety and soundness. at the same time they centered supervision on the management and over governance matters that distracted examiners and banks risk managers from the real risks to safety and soundness. the result was a second, third and fourth largest bank failures in u.s. history in 2023. besides undermining safety and soundness, regulation by reflex has driven excessive regulation that can lead to economic stagnation. economic stagnation is itself a grave threat to financial stability. in calibrating regulations, federal agencies must avoid the temptation to create a zero risk financial system which would result in what others have called the stability of the

graveyard. fsoc should aim to identify vulnerabilities that can lead to systemic crises to mitigate those risks before recommending additional regulation. fsoc should also work with members to support efforts to avoid and pare back existing regulation that stifles lending, capital formation and innovation. the best way to achieve these goals is by centering economic growth and economic security at the heart of the fsoc agenda. promoting economic growth and economic security is essential to ensuring financial stability. economic growth strengthens household business and financial institution balance sheets, creating capital buffers that reduce the risk of defaults and. economic security reinforces domestic production capacity, raising living standards while reducing phone inability to external shots and supply chain disruptions.

the annual report prioritizes economic growth and economic security accordingly with a specific focus on for policy areas, treasury markets, cybersecurity, regulatory modernization and a.i.. the council is ensuring that the u.s. treasury market remains the deepest and most liquid of the world with counsel supporting efforts by member agencies to strengthen this marketing's future shots -- shocks including through the interagency working group on treasury market surveillance and the working group. ongoing monitoring and targeted reforms by individual agencies remain essential to financial stability.

the council is committed to supporting efforts to modernize supervisory and regulatory frameworks for banks and credit unions. going forward, regulation and supervision should address a material risk, enhance transparency and reduce unnecessary burdens particularly for small and community banks. fourth, the council is prioritizing the responsible use of artificial intelligence to strengthen financial stability. the council is working with public and private partners including international counterparts to enhance system resilience while closely monitoring emerging risks. i will close by highlighting our progress in enhancing the utility of our annual report. in this year's report fsoc shifted away from its past approach where nearly every major market and financial sector was described as a

financial stability vulnerability. by introducing a new structure centered on fostering economic growth and security, we are tuning out of the noise to concentrate on the issues that matter most for u.s. financial stability. with this review i look forward to taking your questions. rep. hill: i want to thank the secretary and we will turn to member questions and i will recognize myself for five minutes for questions. you made a persuasive case that since president trump was sworn in that economic growth is the cornerstone of his presidency and you highlighted today as you have in speeches over the year the importance of that wall street is doing well but it is a main street's turned and you would like to see economic growth expanded into what i quote, "the rise of the rest" where we see economic performance it spanned across the country. we shared that commitment on

this committee by reversing elements of the regulatory framework that have solved the concept of too big to fail but ended up creating an environment over the past 15 years where community banks are too small to succeed or may be avoiding the day you chose to use the stability of the graveyard. the committee has worked together on a bipartisan basis that we cap considered over the past year our main street capital access act which we intend to bring to the house floor. we are grateful for your undersecretary who last month joined us as we rolled out that package to talk about how we can collaborate. have disappeared since the great financial crisis. there have been virtually no banks created.

before the gse there were at least 50 per year. the small community banks are not only the anchor for community lending but they provide the bulk of the lending for agriculture, small real estate loans for some -- or small business loans. so a thriving community bank infrastructure and ecosystem is essential. i've met with more individually in round tables with more than 200 community bankers and i've spoken in conferences with more than 1000 at tailoring the essentials. i had one banker from my home state -- under the previous regulatory regime she was told she should be more like bankamerica, the second largest bank in the country. so it is essential that we have the right tailoring the right risk levels and right monitoring

to support these institutions. >> we thank you for your perspective on that and to illustrate in the work we've done on housing in the committee also on a bipartisan basis, it was noticed that banks under $10 billion in size are the heart of our community banking system, they make 60% of our 1-4 family construction loan. while banks of all sizes deliver an amazing capital access in our academy, the heart of -- economy, we find that it is the local grassroots public or privately owned community bank that helps lead that. you mentioned the novo's and under chairman barr's leadership in our subcommittee and once again with bipartisan support, we've enhanced in the main street capital access act ways we think will speed up and make

easier raising capital to have the novo bank relations. turning to digital assets, something we've talked about quite a bit in the time remaining, can you tell me your assessment of how the regulatory process is coming for the implementation of the genius act? >> the genius act was an important piece of legislation for bringing back -- into the u.s. the regulation, creation of digital assets to make the united states the champion. the genius act and the stable coin will be created with that and it could be an important feature of financing the u.s. government. and we are moving with deliberate speed to round out

the house and the senate's intention on that important piece of legislation. >> i am -- i appreciate your work. >> secretary bessent, in the annual report you stressed the importance of promoting financial stability. you noted many ways you plan to deregulate hall street and plant the seeds to avoid another crisis, you said little about the harms of inflation. you have finally begun to discuss in the media that the price of goods are way too high. you mentioned tariffs, they need to come down for americans. as a former hedge fund manager, in 2000 four, and i don't want you to go into long details about this but did you write a

letter to investors raising concerns about the impact of tariffs writing "tariffs are inflationary"? did you say that at that time? >> no. >> we have a new york times article -- last summer when you testified before the senate committee you said "there is no inflation being passed on to consumers" and you were quite definitive. you said there was tariff derangement syndrome. those statements are at odds. -- i want to be clear. >> according to the san francisco reserve, tariffs do not cause inflation. >> last november when the trump

administration finally began to realize that affordability issues in america -- you told fox news that the government was going to reduce tariffs on goods like coffee and bananas and that would bring the prices down quickly. mr. secretary, why was it even necessary -- why was that even necessary -- that is the trump logic. it did raise prices across the board and you know it. i think you knew in july also. the real question is why would you even impose a tariff on a good that a country doesn't grow or make? that would only serve to punish the american consumer.

this committee has taken a bipartisan approach to address another real affordability crisis. housing. there aren't enough houses. one clear reese's -- one clear reason that the housing crisis has grown worse is that you and the trump administration have levied tariffs on housing goods like lumber and steel and appliances. >> [speaking over one another] >> reclaiming my time. however, one clear reason that the housing crisis has grown worse is that you and the rest of the trump administration have put tariffs on housing goods -- these tariffs will result in half a million fewer homes at a

time when we need more homes built and not less. trump single-handedly made housing more expensive and you know it. it was reported that you were planning to lift tariffs on housing production goods. there is an unlawful campaign. the trump administration has waged wet eyes and border patrol terrorizing -- has also harmed home construction across america. so i ask you, sec. bessent, will you be the voice of reason in the administration and urge trump to stop waging a war on american consumers and on housing affordability putting the economy at risk? yes or no? will you be the voice? will you be the voice of reason? >> [overlapping voices]

>> mr. chair would you let him know -- >> [overlapping voices overlapping the voices] >> the gentleman took up my time. i think you should recognize that, mr. chair. >> the gentlewoman's time has expired. the chair recognizes the vice chair. >> thank you, mr. chairman. i will grant very briefly anytime you feel you need. >> i think the ranking member does not -- >> the gentleman will suspend. there is a parliamentary

inquiry. >> mr. chair, will you enforce the rules of the committee so that time belongs to the questioner and prevent filibusters from taking time away. filibusters -- if they do take time away will you allocate additional time? >> i want my time back. >> the gentleman from michigan is recognized. >> i grant briefly anything you feel you need to -->> i believe the ranking member doesn't understand inflation versus one-time price increases. i would also note that housing especially for working americans, a working study has shown that the mass unfettered immigration adding 10-20 million new people demanding housing is what created a great deal of housing inflation for working americans. so you and the biden administration should be ashamed. >> which is also why we were

seeing runs -- there was a recent media story on this that rents are going down partially because of that enforcement. >> it is supply and demand. >> i have a number of issues i have to hit. fsoc and then burma and then 3%. you talk to the chairman about regulators using approach tools. how do you ensure [indiscernible] analytically rigorous approach with cost-benefit analysis and coordination with functional regulators in evaluating? risks? >> that is done through the fbi see. and those chairs are intent on tailoring the rules for small banks. so we do not have another 50% -- in mainstream lending. >> thank you.

you outlined as part of the four goals, number two was protecting from cyber attacks. we have seen a rise in those cyber attacks and scam centers in burma. i applaud you and the treasury for your work in that. including sanctioning north korean individuals selling weapons to the burmese military regime as well as the democratic but an elephant -- been elephant -- been now for lent. i need to move through this quickly. that is why last year i introduced a bipartisan legislation that was -- that would specifically require the president to determine two -- myanmar economic bank and foreign persons operating in the jet fuel sector of the burmese

economy. i read recently that the treasury responded to a reuters report by noting iran's request for new markets is a sign that president trump's policies are working which i agree. i'm also a group -- i'm also aware that the burmese later attempted to gain favor with the president. this is something that simply cannot happen. i represent a significant branca population and know that the active bombing that is going on is unacceptable. and i believe we must continue to post strict sanctions on the burmese leaders. what rules can treasury used to punish iran and burma for violating u.s. and other western countries sanctions? . with respect to iran, president trump upon entering office instructed the treasury to exert a maximum pressure camping and we saw the fruits of the campaign in december as the iranian economy has collapsed.

we have had a large collapse there. they created inflation and the brave iranian people have taken to the streets. we continuously monitor trade between two countries like that. the good news would be iran has a significant shortage of dollars to buy whether it is weapons or goods for the people or to pad the swiss bank account of the iranian regime. >> we have to keep the pressure up on iran but also the burmese junta. lastly, i would be remiss if i did not thank you in public for your discussion of a desire to lower deficits to 3% of the gdp i've introduced along with 14 of my colleagues on the bipartisan physical for my chair with scott peters from california that

urges the house to achieve the 3% goal by 2030, a tangible and achievable goal that is desperately needed. we are building consensus in the house. i know you and the administration to take the taking of that bomb seriously and i hope to continue this conversation with you. >> i look forward to working with you on that and i would note that the deficit to gdp california -- calendar year 2025, 5.4 percent. >> the chair recognizes the gentleman from california. >> i want to agree with the gentleman from michigan that we need to impose those sanctions and protect the roofing to minority to the extent that we can. fsoc has to define what a systemic. i for one think we should not be focused on the assets but rather the liabilities.

we didn't have a problem in 2008 because the banks had too many assets. we had a problem because he had too many liabilities. >> congressman, that is incorrect. ben bernanke said -- >> i'm going to reclaim my time. regardless of that, i'm going to ask you -- i'm not going to ask you to agree with me but with your predecessor, secretary mnuchin. during the first trump administration secretary mnuchin gave interpretive guidance that prioritized activities based on systemic risk --. you have indicated you want to kick off review of fs ocs activities and processes. the f soc improvement act led by my colleague, dr. foster, which i've cosponsored would codify an activities based approach to systemic risk regulation.

does the f soc plan to revert to the 2019 guidance of the first trump administration regarding the definition of --? >> yes, we prefer an activities based approach rather than an institutional based approach. >> i want to pick up on the ranking member's comments about whether tariffs cause inflation. economists can say when the price of something goes up by 20%, that isn't inflation. a one-time price increase. but, in my district, when the price of something goes up by 20%, we call that unaffordability. and to say it is not inflation is a sophistry. i will point out that every time democrats add regulations that increase a company's cost, people in this

room said that is going to cause inflation. tariffs clearly have to be paid by companies and if environmental costs are passed through you can be sure that terrorists are passed through. the ranking member asked the question --why a tariff on coffee and bananas? the answer is obvious, to make our tax system more regressive. to pay for the big bad beautiful bill's cuts in taxes for billionaires and to fund ice. i used to head the largest sales tax industry in this country and we knew the sales tax was regressive but it would be more regressive if we imposed sales taxes on food. and that is what you do with a tariff on bananas and coffee. mr. secretary, we lived through the bailouts of 2008 when powerful men lose money they now want a government bailout.

does the treasury department or the various components of the fomc have the authority to bear -- bail it out? >> could you elaborate? what does bail out? >> would you instruct the banks of this country to buy more bitcoin or change banking regulations so they are encouraged to do so in terms of the reserves they are otherwise required to have? >> within the context of asset diversification within banks, they could hold many assets. >> they can and they are different but do you have the authority to order banks to buy bitcoin or to invest u.s. tax dollars in bitcoin or trump point? >> i am secretary of the treasury and i don't have the authority to do that. and as chair of f soc, i don't have that authority. >> so we won't see our tax

dollars invested in crypto dollars? >> why would a private bank be? your tax dollars? >> is it going to be deployed into crypto assets? >> we are retaining bitcoin. >> that is not exactly taxpayer money. that is an asset of the u.s.-- i will point out -- >> reclaiming my time. one billion of bitcoin was seized, 500 million wasn't retained and the 500 million has become over 15 million. euros >> thegentleman from oklahoma. >> you said the current deposit insurance framework is a vulnerability for the ranking

system. that there is a competitive imbalance with the large banks and that this increases the risk and erodes confidence. can you talk more about a targeted expansion of deposit insurance on interest-bearing transaction accounts? with that strength and financial stability within the system? >> thank you for that important question because it is my belief that because there is the belief that big banks is where depositors will not lose money during a financial crisis. as we saw in 2023, assets leave small banks. a payroll account. i think it is important for small banks to have interest-bearing accounts that can have a much higher level of insurance so they are able to retain deposits during a stress period. this is one of the reasons we

have seen assets leave small banks and it is one of the reasons why we have seen 50% of small banks disappear. >> to continue along this line of inquiry, a robust banking system would help banks of all sizes, reduce systematic risk across the entire system. why is it important that congress act now not only for mainstream but also for financial stability? >> deposit volatility is deposits moving during a stressed time that does not benefit anyone in the long run. >> one more question on this perspective -- congress should look at giving fdic authority to raise --, and appropriate amount . it is data-driven and put smaller institutions on the level. how would our banking system be safer with a narrow and targeted expansion?

>> it would permit the small and community banks to continue computing, it would credit to our main street and it would extend the deposit point during a period of stress. one of the biggest threats to financial stability. >> something i focus on as chairman of the task force on resilience is strengthening market stability and liquidity. we saw occasional bouts of treasury market volatility last year. how do reforms to banking institutions like liquidity ratio and stress test incentivize market remediation and improve stability? >> a wonderful question. it brings more of our treasury market on shore and as you said there were periods of stress

last year. the markets is successively navigated those and at the end of the january we had the third highest volume in the treasury market. we have stayed right in the center line and we are at a five-year low in bond market volatility. >> thank you, mr. secretary. i yield >> back. the chair recognizes the gentleman from new york. the ranking member -- >> if i'm not mistaken, you were working in the financial service industry during the late 1980's. >> i was. >> do you recall or are you knowledgeable of the heating five scandal? back then?

? [overlapping voices] >> i just want to make sure that everyone knows -- the heating five scandal involved five u.s. senators accused of pressuring federal home own bank to expedite and give more consideration to the case of charles keating junior. it led to a 14 month investigation unveiling how five u.s. senators and staff ended up with more than $1 million in contributions, trips to the bahamas and all expense paid stays to luxury hotels. mr. secretary, i'm sure you can agree conflicts of interest and

improper influence by u.s. elected officials over bank regulators weaken supervisory independence and ultimately impose massive losses on consumers and taxpayers. i think we can all agree upon that. and as we know the basic lessons from the post keating reforms still applies today with the office of the comptroller of concert -- currency. as our nation's treasure, i'm sure you also know that a foreign blank investment firm tied to the united arab emirates government quietly -- bought cryptocurrency from the trunk company. and at the same time the president of the united states was dealing with that country on forming policy.

the president's son and co-founder of world liberty financial said "i'm not going to get into who the investors are but i've got some pretty meaningful investors." lack of transparency. and it didn't end there. when trump fans bought the tokens they thought they were getting the deal of a century but what they didn't know was that only trump and his sons had the sole power to decide who can sell the tokens and when -- and when. the trump fans that bought the tokens are now begging to get out. i'm not making this up. you can see it for yourself on the world liberty financial discussion forum.

there is no longer -- this is no longer just about a shady crypto deal or a possible gift when a foreign linked investor is putting hundreds of millions of dollars into a company controlled by the president's family and at the same time this president is conducting foreign policy with that country. it creates a national security concern. i'm not going to ask much -- i just want to know whether you will commit today to pause and heighten the scrutiny of any bank charter at the occ connected to the world liberty financial until all of these

conflicts of interest and foreign influence reviews are completed and shared with the united states congress. will you halt it and do a complete investigation and scrutiny of this license application? yes or no? >> it is an independent entity. >> i will take that as a no. i take that as a no. you are not going to answer that question. [overlapping voices] >> he had six seconds left to

try to answer your question. >> it was a yes or no answer. [overlapping voices] >> stop being the president's flunky. he is talking to me and i'm responding back. stop covering for the president. stop being a flunky and work for the american people. work for the american people! >> as long as he talks, you talk. >> i recognize the gentleman from texas, mr. sessions. >> secretary, welcome to the financial services committee. i'm delighted that you are here.

mr. secretary, we've talked to you about a broad range of things not necessarily related to f stock and your german ship there but i would like to talk to you something about the word public confidence. public confidence does have a lot to do with the financial stability of the country. there are reports and social media that have shown, and i don't want to put you in a position where you cannot answer this because of anything you learned in minnesota with the $9 billion of fraud, but there are social media accounts that show people who are at the minneapolis airport with baggage full of up to a million dollars cash attempting to exit the country. and i have engaged several people who have worked at

treasury and i've asked their opinion about that. not the relationship between how they got the money but just that it is going out of the country. can you tell us or give this committee your viewpoints about people not using some other system but taking cash up to a million dollars to our airports and leaving the country? >> yes, so that is a dhs tsa function. having learned of this, we are attempting to integrate with those forms. what we are trying to do at treasury is to keep money from being wired out of the country through what are called money service businesses. we have issued a geographic targeting order bringing down the amount to $300 and also

asking on the form if someone is wiring money out of the country, are you receiving public benefits? >> these are all very important issues. as you did talk about the department of homeland security, it does have a role in this, i would suggest to you that treasury probably has a -- about the american -- the stability that you have of making sure the dollar remains the dominant use. i would tell you that i would be very interested if you have a working group on this of us making ourselves aware. it is an issue to people who simply sees social media. >> we look forward to working with you. >> as you have alluded to and as the discussion here has been

about banks, community banks and the ability they have to recognize issues. we spoke to you directly about the stress they are placed under good could you talk to us about what you believe the role is of home ownership which is increasingly a part of the political discussion of solving home ownership problem? you have almost a minute. and interest rates as they correspond to people being able to buy their own homes. >> i would note i was also a banks and financial institution analyst for 35 years and was instrumental in working with the government to bring down american continental and sunstate savings and loan which were the direct beneficiaries of

the keating five. getting small banks lending again, we need to get them back in the mortgage market. nobody knows their communities like the small banks. and having moved into the larger system, the strength and breadth of the u.s. market is choice and we have lost the choice in the small banks. and i think we need to get them back into the housing lending business. it is a tragedy that the average first-time homebuyer is now 40 years old. >> i had a discussion last night with realtors about their importance in this process so i would like to make sure that we see community banks and homebuilders, they all have an interest in this. >> before we move on i want to

remind everyone to uphold the rule of the house of decorum. i would like to remind everybody to respect the five minute rule. having been a witness before congress and my executive branch days, it is important to note that our members can spend there five minutes and never ask a question or not. it is there five minutes. let's try to be mutually respectful of each other and i know recognize the gentleman from massachusetts, the ranking member of our digital assets committee. >> the secretary -- mr. secretary, based on early reports, and this is an analysis done by a public citizen and subsequent news reports, when the trump administration came into office they immediately took steps to either halt, dismiss or rollback over 100

enforcement actions and investigations against corporations in its first two months in office. with a very heavy concentration on financial services. consumer protection in cryptocurrency. totaling over $3.1 billion in potential malfeasance avoided. as a member of the financial services oversight council, is that a concern that you have raised within the council -- all of these immediate dismissals of cases against financial services firms? >> the biden administration -- >> please be responsive to my question. >> this back-and-forth is eating your time. the biden administration had an extinction policy -- >> i'm going to the next question. mr. chairman, the answers have

to be responsive if we are going to have a serious hearing. >> the questions. have to be serious. >> those are 100 dismissals of cases that the trump administration came in and executed in their first weeks in office. like that. all of a sudden all these crypto cases went away. the sec was dropping cases. the consumer financial protection bureau dropping cases. you are on f stock with the heads of all these agencies, there should be a serious question to you. trust should be a serious issue for the financial services industry especially as the secretary of the treasury. this is my time. i've not ask you a question. i have not asked you any more questions. i'm trying to get to my next question. >> could you speak a little louder. ? >> mr. secretary, let mr. lynch

proceed with his time. put four seconds back on the clock, please. >> i want to do a comparison of the f stock reports. let's go to 2024 and then we will talk about the current report. in the previous report the members of f soc expressed serious concerns about related to potential risks to financial stability regarding the lack of explain ability and high complexity of ai and the approaches that have a potential to heighten financial instability especially in the areas of bias and discrimination and credit decisions. that was in 2020 four. your report in 2025 focuses on removing regulatory impediments. so in 2024 we were concerned

about consumer protections and now, under your leadership, we are concerned with eliminating regulatory impediments. the dangers -- and that was a report during a time when the chairman and i were cochairs of nai task force. no dangers -- those dangers have not gone away in reality. those dangers are still as severe for the american consumer but they are absent from f soc's report. so you have eliminated or dropped that priority as an issue for f soc. so can you explain the change fromgulations? >> we are charged with financial stability and we are focused on leveraging ai strength -- ai to

strengthen the systems resilience. >> on the issue of explain ability, and he concerned about that and the use of ai in the financial services industry? >> what was the question? >> the issue of explain ability -- how people when they apply for credit and are denied we don't have the ability for ai to explain why they are denied. is it a concern? >> it could be a concern but we don't view it as a priority for financial stability. that is the truth. >> i recognize the gentlewoman from missouri, ms. weidner -- ms. blackner. >> i find your answers, secretary, to be quite clear,

substantive and as always, well informed. thank you for being here. early in your tenure as secretary -- treasury secretary you touched on this today and i quote for the last four decades wall street has grown wealthier than ever before and it can continue to grow and do well. but, for the next four years its main streets turn. it is mainstreet streets turn to hire workers, it is mainstreet's turn to drive investment, it is main streets turn to restore the american dream. and as chair of the capital markets committee, i could not agree more, sir. for too long outdated securities laws have limited everyday americans ability to invest in innovative startups. at the same time the number of companies listed on public markets continues to shrink and

as a result everyday americans in missouri's second congressional district that i have the honor to represent have fewer opportunities to invest. include -- major life goals including buying a home, paying for their children's education or securing a dignified retirement. mainstreet businesses across the midwest and other regions are overlooked as venture funding and capital raising opportunities remain largely concentrated on the coast. that is why i've made it a priority to facilitate capital formation and empower entrepreneurs and small businesses across america. just weeks ago december 11 the house passed my invest act, a bipartisan package of 22 bills focused on three goals -- expanding access to capital for small businesses, increasing

opportunities for everyday investors, and strengthening our public markets. capital formation is the lifeblood. our capital markets are the deepest and most liquid in the world and the investment act will ensure they remain among the greatest strengths for decades to come. i look forward to continue to work with you and the administration to advance these priorities and unleash the power of our capital markets. in your view, what are the largest barriers to capital formation for small business? >> i look forward to working with you. i think i would bifurcate that -- most small businesses or individuals. and for many individuals we have learned that most of them, 38% of americans, do not own equity. with the trump accounts which would give every child one

thousand dollars, every american will be invested in a low cost index fund. every american will have a share of our great and innovative economy. for small businesses it is often a duality of regulatory and access to finance. americans are entrepreneurial. they want to get out and form businesses. and i believe with the confidence of being able to do that. what president trump's agenda has done, businesses have tax certainty with the one big beautiful bill, one hundred percent deductibility of equipment, factories. we have energy certainty with our energy dominance. and we have regulatory certainty as we are pulling back the regulatory morass that was highly harmful to small and

large businesses. >> and as the competition for capital intensifies, the u.s. risks falling behind as our public market remains costly or inaccessible for growing companies. how important is capital formation reform like the reforms included in the invest act -- 22 bipartisan bills that we brought to the floor with the support of 87 democrats -- how important are these reforms to maintaining u.s. economic leadership and long-term growth? >> they are vital. what we have seen as you correctly outlined, since the early 2000's, the number of public companies available for americans and indeed international investors to invest have greatly diminished. it is developed into a network of private assets. >> my time has expired. >> the chair recognizes the

gentleman from texas. mr. green: thank you, mr. chairman. mr. secretary, i ask that you recall liberation day come of the day president trump announced the tariffs. i ask that you recall that when he made this announcement there was a sharp decline in the stock market. in fact, when he made the announcement the and nasdaq experienced a six percent decline. the s&p 500 declined 11 percent. i ask that you also remember that some days later the president announced he was going to pause those tariffs. and when he indicated that he would pause the tariffs, the market then moved up. do you recall these things, mr. secretary? >> i recall them very well, mr.

congressman. >> i ask that you also recall, please, mr. secretary, that hours before the president announced the pause, he indicated by way of truth social , and he has more than 50% ownership of truth social, that it is a great time to buy djt. that was his announcement on truth social. and in so doing truth social had a value that moved up. in fact, true social, mr. president has the majority ownership, went up by $415 million. now here is what is interesting in this scenario -- when he made the announcement and said it is a great time to buy djt, that

happens to be the symbol for his stock. djt. i ask you kindly and as one professional to another, mr. secretary, do you think this should be investigated? the presidents stock being linked to his truth social message and that stock having gone up by some $415 million in a single day. and this is a stock that was doing very poorly prior to that. it had not had a lot of success. do you think they should be investigated? >> no, sir. >> kindly explain to me why we would not investigate the president making such an announcement as it relates to his stock and then reaping some $415 million as potential capital. >> all americans benefited from

the rebound in the markets. date and the rebounds in the market after that was the fastest in market history. >> yes, it was but here is what is interesting about your statement. you did not note that djt had probably the sharpest increase on that day. more than 15 million. and the president said, buy djt, -- >> dj t and then immediately following, now is the time to buy. >> those are his initials. >> but you would agree that is the symbols for his stock --the

symbol for his stock? and you think that should not be investigated come is that what you are telling the american people? >> i believe that anything that is widely disseminated and available to anyone. it was available to anyone. >> here is the point, mr. secretary, i believe that any other president making this kind of move is almost a hussle. i don't want to say that about the president. but i'm thinking this kind of move would at least be investigated. if you are going to allow the president to do this openly and notoriously, $415 million -- what you are doing is giving him a license to move markets at

will, make announcements and reap benefits. he is literally hustling the united states stock market. >> the gentleman's time is yield back. the gentleman from kentucky, mr. barr. >> mr. secretary, you came here to testify about financial stability and threats to financial stability. i think what we are learning from the hearing is how much trump derangement syndrome is a threat to emotional stability. there has been a lot of lectures directed at you today. would you like to clarify anything or respond in any way to any of these lectures? >> i would just like to say that financial stability analysis is centered on identifying vulnerabilities in financial institutions or markets that

might prevent liquidity, disrupt other sectors and lead to significant losses across the financial --. this is what f soc is chartered to do. >> i would like to applaud president trump and the treasury for announcing the trump accounts. i'm personally grateful because my daughter, virginia, was born in october and will be a beneficiary of these trump accounts. not only will this ensure that american children born in this timeframe will participate in the deepest and most liquid capital -- market in the world, it will also teach this new generation about the power of compound interest and will help them develop financial literacy skills which will make them owners and investors and will improve their financial outcomes throughout their lives. can you touch on the impact of

these trump accounts and how it will help those new generation achieve financial independence? as you talk about this, we have a mayor of new york that espouses socialism and members of congress, how will these trump accounts impact this new generation of americans' view of financial independence versus socialism? >> history has shown that people that own a piece of the action do not want to bring down the system when you are a part of the system. 38% of american households do not participate in the equity market. many do. many directly in many through 401(k)s. but over time the goal here is to have everyone owned a piece of the american economic model. we have treasury working with many people who will work on financial literacy. this will be one of the greatest

real-time experiments in history. we are bringing wall street to main street and wall street will work for main street. >> on behalf of my three-month-old daughter, virginia, and millions of american children from a thank you to you and president trump for bringing financial independence to the american people. i agree with you that economic stagnation is a threat to financial stability. that is why we are pushing this mainstream -- main street access to capital bill which will provide for more did no vote charters of community banks, which would modernize the statutory threshold to remove the static nature of the thresholds and allow for more diversity and growth in financial institutions. can you discuss how indexing these stagnant regulatory thresholds will allow banks of all sizes to grow and how that will in turn help financial stability? >> congressman, i've said often that under the regulatory

straitjacket that pushed lending outside the traditional banking system, small banks became too small to succeed. and i think we have to fix that and tailor it to the risk for people that know their communities, concentrated geographically. if you are in iowa, you are concentrated in farming. if you are in florida you are likely concentrated in real estate and tourism. >> and that would promote diversity which would help with financial stability. at the end of last year president trump into law the -- which included my legislation that will be overseen by the treasury department. the national securities act also known as the fight china act. it will ensure that americans are not unknowingly funding the military industrial of our adversaries by enhancing trump administration's outbound

security program. can you discuss the new obligations under this bill and how do you intend to implement it to prevent capital flows into chinese military-industrial complex companies? >> i want to thank you for this legislation. it is another anor -- arrow in our quiver. it is very useful for me to be able to say -- well i'm happy to refer things -- >> i recognize the ranking member of our housing and insurance subcommittee chairman, mr. cleaver. >> thank you, mr. chairman. unfortunately, this is an embarrassing kind of hearing. i've been on the committee for 20 plus years and i've heard all sorts of conflict. i was here when the federal reserve chairman along -- many

others came in. when the asian markets opened after the collapse of the [indiscernible] and i've learned you can't make honey and sting at the same time. the question is whether we came here to sting or whether we came here to talk about issues of importance to the nation? i have a grandson/ . he hasn't seen this so far. what i would like to talk about is your opinion of the dual mandate, stable prices, maximum

employment, -- i would like to get your philosophy on that issue. the creators of the federal reserve. and then the mandate -- was that a mistake? >> the federal reserve act of 1913 created the fed and we have morphed into the dual mandate. the dual mandate is a very delicate balance between maximizing economic growth while maintaining low levels of inflation. >> well, so then you believe in the independence of the federal reserve. >> i believe in the independence of the federal reserve but i also believe in accountability. >> can you explain how you put those two together? >> we have seen these cost

overruns. the fed -- the independence of the fed is based on its trust with the american people. the federal reserve lost the trust of the american people when it allowed the greatest inflation of 49 years to ravage, ravage working people in this country. >> mr. secretary, so the people in the country -- you are speaking of the american people as if they are some human being that had an opinion. i mean, either the fed -- either the federal reserve is independent or it is not. is that right? >> the federal reserve should be independent for monetary policy and every other program it

undertakes impinges on its policy independence whether it is cost overruns on the building, whether it is intruding on the climate or offering political opinions. >> mr. secretary, being a member of the cabinet you would advise the president of the united states to verbally and politically interfere with the decision-making of the federal reserve? i mr. moran is not the president

of the united states. i'm asking about the most influential human being on planet earth. dam i will refer you to president biden's i know

financial institutions to refocus -- and improving affordability for americans. community banks often lack the large compliance resources. to avoid competition and avoid consolidation of the banking sector regulatory requirements must be catered to the size of each institution. can you speak to the importance of tailoring and rightsizing regulations for community banks and the communities they serve and how the one size fits all regulatory approach undermines the lending model? sec. bessent: a banker from my home state of south carolina with $200 million in assets would be small. she should run her business like bank of america. she has three compliance officers out of 17 employees. she knows everyone and her small

community in south carolina so it's important we set the correct standards for the lending risk and for the business success because our main streets will only succeed when these banks succeed. >> 99% of the businesses are small. sec. bessent: to be clear of come under fire from the wall street journal -- they called me a populist because i said it is mainstreet's turn. it is called the wall street journal, not the main street journal. >> thank you. two of my bills are included in the main street act. asking the inspector to examine the agencies. the merger review process to evaluate and delay reduction's efficiency and transparency. the baking modernization act would prevent banks from holding investments for up to 15 years in federal investment rules with real-world timelines of small

and medium-sized business projects that often take more than a decade the plan. the question would be, mr. secretary, can you tell us what the benefits would be brought by greater clarity an merger review process, and how would allowing banks to hold merchant banking investments for longer periods contribute to growth for small and medium businesses in the wider economy? sec. bessent: regulatory certainty for any business, as you know, i am an advocate for small business, it's important. for small businesses who don't have a legion of lawyers, regulatory certainty that is important, and the ability to grow through acquisition is also important. we just want the regulators to put down the framework and stick to the framework. not to regulate through supervision. rep. williams: thank you for that answer. in the 2020 five annual report

you noted financial stability and economic growth were closely linked and observed that many financial and regulatory supervisory policies to consider their cumulative impact on economic growth with new regulatory costs often evaluated and isolation. i hear this concern frequently from small businesses and financial institutions in my district in texas, layer after layer of regulatory burden led to millions of dollars and countless hours spent on compliance instead of serving customers and supporting their local communities. they are hiring compliance officers before they hire loan officers. it affects mainstreet. how do layers of regulations affect economic growth? sec. bessent: again, it is a great return for economic growth. i believe that if we were to go back and look at what has happened, a progressive believes that this is, this regulation of

small banks has been a real problem. she calls the fed the engine of inequality and a lot of the regulation, burdensome regulation, has come out of the federal reserve, but also the fdic and occ. i think removing that, and again get mainstreet lending going again. rep. williams: i have 34 seconds left. would you like to have any of that? sec. bessent: i would like to add under this administration we are pushing for the financial system, the regulated financial system to get back on an even, safe, sound, and smart level through the regulation, but not de patient at any cost but that will help -- but not de -regulation at any cost. chair barr: the chair recognizes the ranking member of the

subcommittee, you are recognized for five minutes. rep. foster: i mentioned our recent letter asking them to look seriously at the risk of deflation of the ai circular investment bubble, something you read about any time you open any financial journal any time these days. there were so many letters sent recently by the senate democrats that received a similarly dismissive response recognizing it is part of what we are supposed to be doing but provided zero specifics on what you're actually doing. how many people do you have that are actually assigned to looking at the risk of the circular finance, off-balance-sheet entities, the parade of terribles that wrecked our economy last time and are looking to wreck it again? how many people are actually working on this and when can we expect to hear what they have concluded? sec. bessent: we are constantly

evaluating -- rep. foster: can you answer my question? how many people are working on the problem? sec. bessent: it is an all agencies, it is an all agency -- rep. foster: no answer. you're not willing to give me a number. sec. bessent: i could say 2000, but that wouldn't be correct. some people may devote an hour per day some may devote 80 per week. getting back to you and a change in tone, i'm happy to send you a reply. rep. foster: i would appreciate something with more detail than what we got from the under assistant acting -- whatever it was. also, last time we spoke i ask you a simple question i didn't get an answer to. does this administration support a strong or weak dollar

policy? as far as i can tell you are all over the map. do you support a strong or weak dollar policy and how do you score which ever way you're trying to go? how are you doing? sec. bessent: we always support a strong dollar policy. rep. foster: that is interesting. last time we spoke i presented a couple of graphs which presented the historic fact that -- the interesting fact that every time a republican is in charge of the presidency two things happened. the dollar has gotten weaker and manufacturing employment has dropped. this has happened during every republican president in our lifetime and the reverse has happened every democratic president. the dollar has strengthened. actually achieve your objective other than just talking about it. since the time of that, this applies here, when the dollar was only 8% -- i think it is down 10.5% now, continuing down -- my talk which index are you

using? rep. foster: the last time i looked at it was down 10.5%. sec. bessent: you have the president on their under president clinton -- rep. foster: it would be my belief that it was speaker gingrich and what he -- sec. bessent: working with the clinton administration -- rep. foster: you agree it is an historic fact during those presidencies manufacturing employment dropped and the dollar got weaker during republicans without exception? i have sec. bessent: seen the data. sec. bessent:rep. foster: i presented it to you in a graph. when i attended a different hearing you said rather negative things about the data. as a finance professor, you would have given it an f, i believe it work. i am not a finance professor. i'm a manufacturer.

i understand the first rule of manufacturing is you don't piss off your customers, something that your administration revels in doing, internationally especially. i think it's easy for me to understand why manufacturing employment has continued to drop. ever since liberation day we have seen a continuous decline in manufacturing employment, one of your one promises. sec. bessent: as a manufacturer you would know that i cannot snap my fingers and create factories. there is a building process that is well underway. i can send you the chart on factory groundbreaking. rep. foster: i understand. that we have been a historically low tariff nation i believe is responsible for the extraordinary economic growth over the last decade of the united states compared to that eu which is a high tariff regime. we are joining -- we have been down that road -- sec. bessent: you are touching on a lot of points. rep. foster: a manufacturer that

has kept jobs in the midwest, i think i have more credibility -- chair barr: the gentleman's time has expired. does the gentleman want something inserted in the record, the document inserted in the record? without exception it is included in the record. mr. loudermilk, vice chairman of the financial subcommittee. rep. loudermilk: thank you for being here. before i get to my questions i want to build on something mr. lucas talked about. this committee held a hearing on positive insurance and had an honest conversation about the need to maintain confidence. potential costs and unintended consequences. how we need more data before making reforms. this issue is too important to mess up and i hope we can continue to talk about it in a thoughtful, data-driven way. onto my own questions, sec. bessent, the bank secrecy act, bsa, reporting modernization is

long overdue and is required by the anti-money laundering act of 2020, otherwise known as amla. increasing these thresholds is a component of the modernization requiring banks to report cash transactions that exceed $10,000. that threshold has remained the same since 1972. this low value threshold in recent years has led financial institutions to file over 20 million reports on customers annually. as i brought up during our recent hearing, $10,000 in 1972 was enough to buy two brand-new corvettes. they give an illustration of how inflation has affected these cpr filings. the vast majority of these reports are filed on law-abiding citizens conducting innocent transactions. something you stated, banks need to be focused on their bsa reporting, they need to focus

the bsa programs on real illicit finance risk. that focus on higher value activities would also better serve our law enforcement and national security objective. a few weeks ago we had a marked up in this committee and passed my bill, the financial reporting threshold modernization act, that would responsibly raise the thresholds while ensuring these reports are still useful for law enforcement. as part of your commitment to implement amla, will you streamline the outdated reporting rules and increase the thresholds? sec. bessent: yes, we are studying this carefully and look forward to working with you on it. the other thing we are trying to do is use common sense for geographical targeting that we can lower thresholds with a geographical targeting order for areas where we see disturbing trends, like the southern border, or counties in

minneapolis. rep. loudermilk: i believe under the program exceptions exist that give flexibility. you have talked about the importance of creating an effective bsa program that will allow financial institutions to focus on high risk activities other than just focus examinations on paperwork. how can you make sure our financial institutions can focus on finance risks and do you plan to consult them and law enforcement throughout your process? sec. bessent: we have done an iterative process and have had numerous visits at treasury. our group has been on the road regionally asking for best practices, and we are working to incorporate, to get the right next of enforcement and common

sense. rep. loudermilk: that is good to hear, because after spending almost 30 years in the i.t. sector, especially with the security, i have equated the way the system is now is looking to a needle in a haystack. the government's default is, let's make the haystack bigger. i believe that we should make the haystack smaller so that it is easy to detect the fraudulent players. do you believe that a modernized effective bsa regime would hinder or undermine law enforcement if we were to modernize? sec. bessent: again, if it were done in a very smart way that optimizes looking for criminal activity, not at all. rep. loudermilk: that's the direction i think we should be going. eliminate the noise so we can focus on where the bad players actually are. mr. secretary, when can congress expect to see the treasury's proposed changes to the bsa

program? sec. bessent: congressman, i will get back to you on that. we are working with all deliberate speed. rep. loudermilk: stand ready to help anyway we can and appreciate your efforts and service, yield back. chair barr: the gentleman from georgia yields back, the chair recognizes the ranking member of the house permanent select committee on intelligence, you are recognized for five minutes. >> welcome, mr. secretary. it's good to have you with us today. in february of last year during your tenure as acting director you instructed the staff to suspend all rulemaking, communications and enforcement actions. one of the rules that was in process at cfpb was a rule that would have kept credit card late fees at eight dollars for large issuers. understand that there is an agency process. do you have a personal view as to the wisdom of an eight dollar

cap on late fees? sec. bessent: i do not. >> you have no view? the president recently proposed a 10% cap on credit card interest rates. that has caused a certain amount of interest in this institution presumably it would require legal action. what are the pluses and minuses of that proposal? do you have a personal view on the wisdom of that proposal? sec. bessent: the president is interested in affordability for the american people in his view is banks have done very well and that by capping the rate for one year it would give the american people the chance to recover from the horrible biden inflation of 22%. rep. himes: we were both in the finance business for a long time. is there any possibility, risk, that such a cap would have a

pretty constrictive effect on the availability of credit, especially to subprime borrowers? sec. bessent: again, i think that would be important to examine as it it being put in. congressman, what we've seen over time is credit card use to compete on what was known as apr, financing rate. now they compete on rewards. what we have seen is the apr, the subprime borrowers are paying higher apr. the upper end borrowers are getting more rewards. maybe there is a calculus here on how to diminish rewards and cut the apr. rep. himes: when you are asked a similar series of questions you gave a similarly careful answer but you said that they were bad actors referring to credit card companies. who are those bad actors? sec. bessent: i'm not going to name them. rep. himes: you will tell as they exist but won't tell

congress who they are so we might undertake some oversight? sec. bessent: i think you have very large investigative committees. rep. himes: many years ago working with then colleagues john carney and john delaney, we put together a proposal for the removal from conservatorship of the gses. you are will call there was a round table in treasury around housing and its affordability and the fact that we need to build a lot more housing. the conclusion from that roundtable, as i understood it, was one thing. do no harm. over the past year, the president and the director have tweeted a host of utterly chaotic proposals for the gse's, including immediate ipo, 50 year mortgages, ending special-purpose credit programs, rapidly exiting conservatorship, stripping away gse's housing goals come on and on. mr. bolt he seems to appointed

himself the indict her, the inquisitor of people like letitia james and adam schiff. apart from making a political point i'm trying to point out that we have a crisis around housing affordability. the hud secretary was here the other day using terms like, i will encourage the building of additional housing. my final minute, what should we be doing with respect to the gse's so that the gse's can create a lot less risk for the american people when they represent the conservatorship so they are a vibrant part of an expanding housing growth sector? sec. bessent: congressman, i would point out the market is the ultimate arbiter and the spread between mortgages and treasuries, despite your statement, is the lowest it has been in many, many years. rep. himes: that is because the mortgages are effectively guaranteed by the federal government. that is not surprising, that is trivial. sec. bessent: but the spread is

lower than this time last year and it was guaranteed last year. rep. himes: you are an expert in the field. what should we be doing right now to assist in the production of additional housing? sec. bessent: it is a very complicated question, but the most important thing that has happened is we now see mortgages at a three-year low in january. bringing down payments and moving toward fannie and freddie eventually leaving conservatorship. our northstar -- the spreads cannot widen. chair barr: the gentleman's time has expired. rep. himes: i yield back. rep. foster: the gentleman from ohio, mr. davis cares our national security subcommittee. you are recognized for five minutes. rep. davis:, thank you for your leadership at treasury. like the markets, i am comforted and reassured by your leadership, so thank you.

i hope you keep continuing the excellence that you have delivered for this first year in the job. the export/import bank has played an increasingly important role in strengthening u.s. supply chains and doing that has been a big focus of this administration with a whole host of policies. given china's dominant position in many critical mineral supply chains and the banks' expanding use of financing tools to address these vulnerabilities, does the export/import bank need extra capital or authorities to scale support for supply chain resilience? sec. bessent: i believe that -- would come to you. he is doing a fantastic job as the ex/im bank's overall. it is the linchpin towards regaining sovereignty with not only critical minerals but semiconductors, medicine, steel.

anytime ex/im bank asks for more money or security, we are talking about economic security and national security are the same. rep. davis: we will be meeting this week to talk about that. we need to reauthorize it and i think those are things we want to take into consideration. what additional capital and authorities do they need leading into the defense production act. in the most recent ndaa, certain defense production act authorities were shifted to the department of defense. given the dpa authorities have historically been housed at treasury to address supply chain vulnerabilities across the entire economy and not just defense needs, should the primary dpa authorities remain within treasury to make sure we get a whole of economy approach? sec. bessent: we are working well with the deal w and i can tell you that the defense

priorities are the same across the economy. it is really -- it starts with critical minerals. i believe deal w is leading that along with ex/im bank. rep. davidson: as we work to modernize it it will be the first modernization since covid and we see the expanding use and how the administration has made such a focus on our trade policy and reassuring. i think the debate and reauthorization, modernization of the defense production act brings coherence to what has been a major focal point for the administration. thank you for your leadership. lastly, as mr. foster was trying to tout the benefits of communist money, i appreciate you calling him out on that and rejecting it. frankly, during the biden administration the federal reserve posted positions that they were literally recruiting

developers to develop a central bank currency including a senior crypto architect role dedicated to development. are you aware of any ongoing government or federal reserve efforts to develop a u.s. central bank digital currency? sec. bessent: within the administration, absolutely not. president trump has made it clear that a central bank digital currency is, the creation of the u.s. as a digital powerhouse. i can't speak for what goes on at the fed, but i would assume they would not be part of that either. rep. davidson: i would hope so. not only has the president and clear, he issued an executive order on it and said we would not develop a central bank digital currency. of course, that applies to the whole executive branch. does that mean it applies to the federal reserve? sec. bessent: i would say the federal reserve has been very cooperative in terms of regulation and a bit of forward

thinking with the genius act, what is happening with stable coins, how that fits within the financial and payment system. rep. davidson: that approach clearly contrasts with what china has been working on, has essentially managed basically programmable money by the federal government. frankly, they are working with the bank of international settlement, the central bank, the bank of england, mark carney seems to be a fan of it, and they are developing communist money and impose it on their populations. it seems you have a different hope for the future? so, as he lay that out, i would love to work with you on the future of money. i think it will shape the future of western civilization. sec. bessent: i couldn't agree more. it is moving fast. rep. davidson: i yield back. chair barr: the chair recognizes

the ranking member of our national security subcommittee. >> thank you, mr. chairman, ranking member. to the witness, let me start by saying i and concerned about the direction of this country, this treasury, this administration, this president. i believe our democracy is under attack as well as the federal reserve, see dmi, hud, and the list goes on and on. i would like to start with a question on community development financial institutions. you played a key role in economic development. as a matter of fact in your one page testimony you mentioned economic development or growth or security almost a dozen times. you also instated promoting economic growth to ensuring

financial stability, economic growth, strengthens how business , financial institutions, so forth, so forth. nationwide they financed more than 45,000 affordable homes. applications for the cdfi fund program has been pending for 12 months or more and except for some funds for administrative, none of the fy 25 program funds have been allocated. last fall cdf funds issued a supplemental application to cdfi to make sure they were in compliance with executive orders issued by the administration. the funds have not been disbursed. my question to you, are there plans to place -- in place to release moneys the cdfi's so

they can continue to fund affordable housing projects? yes or no? if yes, win? if no, why not? sec. bessent: been working to implement the cdfi programs -- >> this will be a yes or no. no, no. i will abide by the chairman's rules, but i have some rules. you can say yes or no. if you say yes, you may continue to give that support. if it is a no, you tell me why not. we need to be clear. let's start with a yes or no. i am trying to be respectful. you will not do what you want to do on my time. yes or no. are you can say i will not answer and i will move on. sec. bessent: number three. >> let the record show he refuses to answer a question. we are not going to do that with me.

chair barr: it is the gentlewoman's time from ohio. >> you have talked about the value of housing, and you are not releasing the funds. i want the record to be clear on that. let me move on. i have asked you, your predecessors, democrat or republican, jack lew, steven mnuchin, janet yellen, you a year ago, about putting harriet tubman on the $20 bill. we started this process in 2020. at that time, jack lew said it would take four years. i sent you a letter. do you know what your response was to me? sec. bessent: i haven't seen the letter, ma'am. rep. beatty: you responded to my letter recently because i

drilled you on this. you responded to tell me in a few words, it is a complex process. that is not really an answer. we know it is a complex process. your republican predecessor said the same thing but went on to support it. it was supported by three people before you. it was scheduled for 2020. then it got backlogged, because it is a complex process, to 2028 . the last republican said we would be on target to do this. now, my question to you is, why is it not on target, and why are you not engaged in this process, part one. part two, do you know who is over the department of engraving and printing? do you know who is over the bureau of engraving and printing? sec. bessent: i am.

rep. beatty: you run it? be careful now. do you run -- chair barr: the gentlelady's time has expired. rep. beatty: let me ask him to put it in record. let the record show that he was incompetent in answering -- chair barr: i invite the secretary to respond to your question about -- that you proposed on the bill in writing. i now call on the gentleman from tennessee, mr. rose. you are recognized for five minutes. rep. m. rose: thank you, thank you ranking member waters, thank you for taking time from your schedule to be here today. if you would like to take a moment to address any of the issues that were on the table -- sec. bessent: numerous incidents with counterfeited bills and we are revamping the $50 bill which is the most counterfeited.

the congresswoman doesn't seem to have an interest in the safety and security of american money. rep. rose: sec. bessent, i enjoyed reading your recent wall street journal op-ed with my friend senator bill hagerty about strengthening main street banks. you make a compelling case that the current fcic insurance limits contribute to an uneven playing field, where deposits flow towards the largest institutions in times of stress. could you elaborate on how raising deposit insurance coverage would help restore confidence in community and midsized banks, particularly in places like my home state of tennessee, and ensure small businesses can keep their payroll and operations anchored in their local banks? sec. bessent: congressman, what happens during a stress period, the owners of the capital, rightly, move it to where they believe their deposits are insured. there is the belief that large

institutions have a special exemption called moral hazard. i think by increasing the deposit accounts, especially for payroll accounts, that those deposits will not -- when a local businessman calls up and says i have $7 million in your bank, we have bank here for 100 years but we will have to move, they usually -- many times they do not come back. rep. rose: i share that view. secretary bessent, do you believe that raising deposit insurance limits would directly translate into more lending capacity for small businesses and farms that rely on community banks, particularly in rural communities like those i represent across middle and east tennessee? sec. bessent: congressman rose, when deposits flow out the ability to have capital to lend is greatly diminished. rep. rose: thank you.

i share that view. the annual report highlights the terrorism risk insurance program and under secure -- underscore small insurers are significant participants with their market share stable since 2017. in light of that, and given that the terrorism risk insurance act backstop has never been triggered in more than 20 years, do you see any clear evidence today of market failure or a pressing need for federal intervention that would justify a permanent federal backstop at current levels in this market rather than be getting a responsible transition to a more private terrorism-risk insurance system? sec. bessent: congressman, i have no data, so i have no opinion, but i will get back to you on that. rep. rose: i appreciate it. how does treasury -- if you could add to this -- taxpayer risk today, and you believe that risk -- that risk profile is

consistent to what congress originally envisioned as a temporary federal program? sec. bessent: i used to be an analyst but i haven't seen the table so i will not comment. rep. rose: i was proud to vote for president trump' is one, big beautiful bill and create trump accounts that give kids a real foundation to build savings and wealth from day one. the accounts are a great way to help families in tennessee and across the country start planning for their children's futures. can you update us on how implementation of the trumpet counts is going to so far? if they have the resources to stay in the program up effectively and of credit unions and small community financial institutions will be allowed to participate in offering these accounts? sec. bessent: so, i will work backwards. initially, there will be one master custodian for the accounts. initially the small banks will not be able to participate.

eventually the holders of the accounts will be able to migrate out to designated institutions. the uptake is going quite well. we had a big event this week to rollout the account. more than one million households representing more than one million children have signed up. i would tell everyone to look for the commercial right after the national anthem at the super bowl this weekend. i think we are prepared for a flood of sign-ups. they will go live on july 5. the goal is the low as possible fees on these index funds. rep. rose: thank. hopefully no singing. i yelled back. chair barr: the ranking member of our monetary policy task force, you are recognized for five minutes. >> thank you, chairman, ranking member, witness. i have to confess, i'm very disappointed today.

i think a lot of our allies are losing faith in us. we hear it in our european allies, certainly. we see it in the diminishment of our dollar. but we always seem to have faith in the fed chairman and the treasury secretary. they are always very serious people. seen around the world is very serious people. been here for a long time now. i used to watch when a friend of mine sean duffy would sit there and scream at the top of his lungs at jack lew with he was treasury secretary. the treasury always answered in the most logical way, never flippant, never lie ableist. -- never liablist. my colleague said she would like to see harriet tubman on the $20

bill. she never said she wouldn't want the security of money. that was very liablist and flip it. that comment you made about the fed, we lost faith in the fed you said in your testimony today. because of inflation and the cost overrun in the buildings. mimicking basically the same thing that the president said about the chairman. you didn't say it in the same words. you said it in a way that is a little more elegant but means the same thing. today you have been very performative and everything you've done. that is very disappointing. i wanted to ask you about the independence of the fed. i think it is important you did comment about that a little bit, but today i think has been pretty much a waste of time. sadly, i think, it really does erode the faith in our country when a person as important as you gives the answers you gave

today. so, i'm not going to ask you any questions because i think it would be useless. i will say, mr. chairman, we've had good hearings recently. this was not one of them. this was not your finest day, and it's too bad because i think you are a competent person. i disagree with some of your policies but you are a competent person. the president has put people in very important places that are characters of incompetence. that's not you. today was not your finest day. chair barr: the gentleman from california yields back. the chair recognizes the gentleman from wisconsin who chairs the subcommittee here on digital assets, financial technology, and artificial intelligence. >> thank you, mr. chairman. mr. secretary, thank you for being here, your service, your leadership at treasury. there has been a lot of energy in the room today. a handful of times you made great points and have been cut off. i want to give you an

opportunity to elaborate on a couple of these points. at the beginning of the hearing today ranking member waters, you are in the process of mentioning the 10 to 20 million illegal immigrants came into the united states during the biden administration functionally with the blessing of democrats in congress. as you mentioned that and were building into a comment about the impact that would have on the price of housing in the united states, the ranking member said, can you shut up, end quote. i think you are about to make a good point about the impact that biden's and the democrats' open border policy had on the cost of housing. the time is mine and i would love for you to provide additional details as to where you are headed there. sec. bessent: congressman, thank you. to answer congressman vargas, who is not able to stay for the whole -- the here and my reply,

you would have seen that when approached i am happy to have a conversation. representative green, who was known for some fiery moments, and i, with a respectful back and forth, i enjoyed my conversation with him and it's a shame all conversations cannot be like that. yes or no answers to me means that the representative has a talking point from his/her staff and is unable to discuss things in a logical, in-depth manner. in terms of your question, we have economic growth for the last three quarters. the economy is doing very well. the financial stability that we are seeing, whether it is through growth or through economic security, we have been

brought back from the edge. rep. steil: president trump, your leadership at treasury, we have absolutely been brought back from the edge. in particular as we think about the impact of housing, was biden 's open border policy directly related to the increase in housing? sec. bessent: a study from the wharton school said supply and demand, especially in low in housing -- low end housing. we don't know how many illegal aliens flooding into the housing market. they need someplace to live. what we have seen is the wharton study says that for every 1% increase due to the illegal immigration, rent went up 1%. if you have a 20% increase in population, rents went up 20%. rep. steil: economics 101. supply and demand and democrats

drove up demand by having a massive number of illegal aliens. sec. bessent: democrats didn't care what they were doing to the working class americans. we have seen a substantial drop in rents. rep. steil: you said lumber is at a five-year low. ranking member waters said, you don't get the talk. the time is mine. you get to talk. lumber is at a five-year low, supply and demand in effect, what is the impact of that on the cost of housing? sec. bessent: again, facts can be annoying for people who just want to make talking points. the fact is, we have not seen an increase in housing costs. the increase in housing costs came during the great inflation, up 21.5% for consumer prices for the cpi. in the 30's for working americans. that is the cost of housing and regulation. rep. steil: we are still

recovering from the democrats' terrible policies. we passed and signed into law the stable act, legislation related to stable coin. treasury is required to complete implementing regulations by july 18 of this year. are you going to hit the deadline and are there any impediments preventing you from hitting that july 18 deadline? sec. bessent: i don't see any impediments at present. if we are going to hit that we will notify you on committee. rep. steil: i appreciate that, appreciate your service, i yelled back. chair barr: recognizing the gentleman from illinois for five minutes. >> thank you for being here, mr. bessent. appreciate your patience with us. since the u.s. captured president maduro the administration has been selling venezuelan oil and that will continue indefinitely. the president's january 9 executive order said those funds are the sovereign property of

venezuela and has directed you to facilitate this transfer as directed by the secretary of state. as i've gone through the trusts you have the authority to oversee, none of those have any relationship to venezuelan oil. can you help us understand under what statutory authority treasury is relying on to exercise the discretionary control over natural resources and sovereign assets of another country? sec. bessent: treasury has no control. >> what statutory authority? sec. bessent: we are operating under an agreement between state and energy. we are not involved -- rep. casten: that it is being held in custody and facilitating disbursements. under what authority are you acting? sec. bessent: i will get back to you but it is under agreement

with state. rep. casten: let me clarify because my concern is that the executive order sites ieepa. ieepa says you have to be engaged in hostilities with a country for it to trigger that claim. secretary rubio said that we are not at war with venezuela. i'm glad we are not at work. unless you disagree with secretary rubio, i am unclear under what legal authority the united states has to control or disperse those assets? sec. bessent: i would believe the ieepa authority would act for a period of time -- rep. casten: that is not true. please provide in writing. last week secretary rubio also said the 200 million in proceeds was in a qatari bank owned by venezuela. he went on to say that treasury has a written agreement with venezuela's interim government to review the monthly budget request for payments from that account. i come back to where the

authority comes. what statutory authority are you using to exercise custody indirectly through a third country the direct release from those offshore accounts? sec. bessent: ieepa. rep. casten: that is not in ieepa. please provide us with the legal guidance because this matters. what controls are you putting to audit those flows? you know the venezuela government still has a lot of shady people. how are you controlling the dispersion of the flows back to some of the shady characters that the president is concerned about in venezuela? sec. bessent: again, we will bring in outside auditors for this. the venezuelan government will be -- rep. casten: do have an agreement for that audit in place right now? sec. bessent: not at present. rep. casten: secretary rubio, when he was asked that question before the senate, he said that the treasury had handled the agreement that he would be providing to the senate committee. are you saying that secretary

rubio was incorrect or you are not aware of the agreement that treasury directed? sec. bessent: i am not aware of the agreement. rep. casten: secretary rubio said he would provide that. can you coordinate and give us your word -- he is alleging that that was done under your -- sec. bessent: so you know, the goal here -- rep. casten: the concern that i have is this would be considered fraudulent. i have a specific concern we entered into contract with companies that have pled guilty to bribery and if i was a company buying stolen goods and we didn't have statutory authority i will have creditors coming after me. one last thing, sir. i will read you a quote. trump would rather pursue a weak dollar policy rather than implementing tariffs. do you recognize that quote? sec. bessent: i believe you are referring to a letter that i wrote.

tariffs could be inflationary. rep. casten: it says tariffs are inflationary. you said to the chairwoman -- the record january 31, 2024, a letter from scott bessent where the quote comes from -- do you want to correct what you said to the ranking number when you specifically said that you did not say tariffs are inflationary? sec. bessent: i think she referenced a letter in the summer. rep. casten: i think it was the new york times. you said tariffs are inflationary. you said tariffs are inflationary. do you want to correct what you said to the ranking member or did you lie? sec. bessent: if i was mistaken i want to correct it. i was also mistaken when i said that tariffs could be inflationary. chair barr: the gentleman's time has inspired. the gentleman's time is expired. the chair recognizes the gentleman from south carolina, mr. timmons. you are recognized for five minutes. rep. timmons:, mr. secretary, it's great to see you and thank

you for being here. your experienced leadership at treasury is widely respected to make the u.s. economy more competitive in the global economy. you hear questions about tariffs. is the purpose of the last year to renegotiate treasury agreements to make the u.s. economy more competitive in the global economy? sec. bessent: 100%. there are numerous goals, but it is to make the u.s. economy more resilient. we are now seeing 4.1 percent growth for the past three quarters. so, we are seeing inflation drop. tariff inflation was the dog that didn't bark. rep. timmons: i appreciate it. i think the business is trying to compete in the global economy are better off because of the last year. there was uncertainty, but most of that is behind us and i appreciate your hard work. after several years of regulatory uncertainty and pervasive government overreach, it is encouraging to see serious leadership at treasury focused on restoring balance to our

financial system. that work matters not only to markets but the families, small businesses, and communities across the country. you called for a fundamental reset of financial regulation emphasizing treasury's role in promoting appropriately tailored regulation to support economic growth. i agree with that approach. there has been progress on tailored supervision. this has been done to modernize regulatory tailoring itself. particularly the interagency trash old -- thresholds that trigger category two through four bags. those thresholds were set years ago. they haven't been updated to reflect inflation, economic growth, changes in the financial system. banks that were never intended to be treated like that are increasingly subject to requirements that don't mask their risk profiles. republicans raise this concern last september. how are treasury and the financial stability oversight council working to coordinate across the agencies to modernize and update these thresholds and

ensure rates we are tailoring keeps pace with economic reality rather than falling further behind it? sec. bessent: congressman, i believe there's a chance that the community banker that i referenced with $200 million in assets might have been from your district. we are all hands on deck. we have seen 50% of these institutions disappear. we are working as quickly as we can. one size that's all for regulation is a disaster. potentially the bank president and owner from your district said, bank of america's regulatory regime is not something in the piedmont and upcountry in south carolina for a bank with 200 million in assets. rep. timmons: tailoring should apply to prudential standards in supervision itself. my bipartisan legislation, the smart act, would allow smaller,

well-managed and capitalized institutions to combine certain consumer compliance and i.t. exams, reducing unnecessary burden while preserving strong oversight. mr. secretary, how can legislation like the smart act and other bipartisan efforts that this committee has advanced to help build on the principle of tailoring and restore a regulatory framework that truly works for main street without compromising safety and soundness? sec. bessent: i think it may be very important to get this into a regulatory framework, because what we've seen for too long, just as the making salmon are said to the $200 million banker, you should be more like bank of america, we cannot have supervision -- we cannot have regulation done through supervision. we need to have clear guidelines for tailoring, for many banks are industry and geographic concentrated, and we've got to push this through or we are --

it will be too small to succeed. rep. timmons: i want to discuss the trillions of dollars in foreign direct investment that you and president trump has shepherded into the united states over the past year. in south carolina alone hundreds of billions of new investment announced that will create high-paying, highly skilled jobs for our communities. every week that i'm in washington i meet with a manufacturer expanding its footprint in the upstate. removing tariffs has been welcomed by manufacturers like your rig who has benefited from their insensible trade policy. it's hard to believe the largest coffee manufacturer in the world is in spartanburg, south carolina, but it is and we appreciate your work to make sure that they are competitive in the u.s. and global economy. with that i yield back. sec. bessent: a lot of discussion on coffee prices. chair barr: time has expired.

the gentleman's time has expired. mr. secretary, if you would respond in writing if you have more on the topic. the gentlewoman from massachusetts, ms. presley. you are recognized for five minutes. rep. pressley: it took a year to get secretary turner before this committee, so i'm grateful for your return. i went to pick up where we left off nine months ago. the average american spends over $20,000 on baby costs in the first year of having a baby. essential products like car seats are more expensive because of trump tariffs. you told me last time that they were under consideration, but nothing has changed since may of last year. much to the distress of families. there is still no exemption for tariffs on baby products. for the record, how many tariff exemptions are there? sec. bessent: there are actually

very few now. rep. pressley: you are right. i think 30 pages of exemptions totaling over 1000, including -- can you explain to working families struggling to make ends meet why baby products that are required by law are not exempt from trump's tariffs? sec. bessent: again congressman -- congresswoman, it is a matrix. many of these products, unfortunately, are made in china. rep. pressley: i reclaim my time. that is an unacceptable answer. you had nine months and you told me it was under consideration. you have nine months to think about it and while you were thinking about working families have been struggling. it is required by law that they have many of these essential baby costs. your report from the department

of treasury refers to them, car seats, as essential safety tools. if you can acknowledge that -- sec. bessent: i will acknowledge the gas to run the car. rep. pressley: you included asbestos in your exemption. asbestos but not baby products? sec. bessent: i think you would want children to be safe in their home. rep. pressley: parents of newborns do not want to hear your excuses. they want to get their baby safe, comply with the law, and they need actions to lower costs. period. will you ask a baby products from tariffs, yes or no? mr., respectfully -- sec. bessent: i am the treasury secretary not the ustr, not the president of the united states, you are asking the wrong -- chair barr: it is the gentlelady's time. this is the financial stability oversight. rep. pressley: mr. secretary, i ask for your advocacy than.

a no or non-answer is unacceptable to the working families that you claim to care so much about. moving on, moving on, moving on. i am moving on. sec. bessent: you will have my advocacy. rep. pressley: can you say that again for the record? i will have your advocacy? for an exemption? sec. bessent: i am one voice. rep. pressley: have you been paying attention to the high rate of unemployment for black workers? sec. bessent: it is traditionally higher than for -- rep. pressley: it is through the roof right now. hundreds of thousands of black workers that have been pushed out of the workforce in the unemployment rates for black workers among all workers are theblack workers contribute ove1 trillion. but the push out of these workers has led to a loss of 37

billion dollars in the gdp. with black women being among the most educated and most active in seeking work and it is a glaring warning sign to where our economy is headed because black workers have always been the canaries in the coal mine. black women are bearing the brunt but everybody will feel this. i have sent letters to fed chair powell who was sent -- for something to be taken. will you commit to analyzing black unemployment rate specifically and its impacts on financial stability? yes or no. sec. bessent: i will analyze black unemployment rates. rep. pressley: will you give us a report or plan of action and i was thinking march 6? sec. bessent: i cannot commit to a date. rep. pressley: i cannot commit to a date. sec. bessent: march 6 will take a little bit more than a month and that will -- and that is to community working group and find -- and report your findings.

black families, futures and the lives and livelihoods of all who call this country home are depending on you to act. with that, happy black history month. sec. bessent: i was sorry to not see you run for senate. chair barr: the chair recognizes the chair of the subcommittee on oversight and investigations, mr. muse or, from pennsylvania. rep. meuser: thank you when you state that it is now main street's turn, i can say that the ninth congressional district of pennsylvania like that. the previous secretary once when i asked what their economic growth initiatives were, they implied that federal spending was the primary, if not only growth initiative. clearly, under your leadership, president trump, senate republicans in congress passing the family tax cut delivered meaningful tax relief, billions to workers and small business

owners, no tax on tips and regulatory reform, no tax on overtime and all of this driving our savings and economy to a booming gdp, in the over 4% range. things are going well and we expect 2026 to be pretty exciting as well. sec., if there is anything asked still on your mind that you would like to respond to, i want you to go ahead and do so. sec. bessent: again, this is supposed to be a financial stability oversight commission, and we have taken this very seriously. we believe that one of the reasons i am sitting here and came out from behind my very quiet and nice private life is because i was worried that the u.s. was not going to become like a european social democracy. and what we were seeing in europe in many countries is the

debt spiral of higher debt, raise taxes and lower growth. the u.s. reported despite the government shutdown and the longest government shut down in history or .1% growth for the past three quarters. and so, we have been successful at that. we celebrated .3% growth. and so, it is no comparison. and i think we are beginning to accelerate. and, more importantly, everything we are doing is to fix this terrible biden inflation from the past four years. 21.5% and much more for working families, and we are bringing that down. rep. meuser: your remarks in the president's remarks in davos talked about how you spiral down in the economy, not having close borders or secure borders an

over reliance on imports and driving the public sector rather than the private sector is a recipe for disaster, so we appreciate you correcting the ship and moving the united states in the right direction. just to get to some questions. you have emphasized putting main street ahead of wall street when evaluating bank capital standards. how will modernizing the capital frame -- framework prove credit access and affordability for homeowners, and farmers who ultimately bear the costs for such an excessive capital requirement? sec. bessent: again, the groups you just listed are the three most dependent on community and small banks. and, we are determined to increase their lending capacity, to increase their proclivity to lend. and we want to do it on a safe, sound and smart basis. rep. meuser: in the previous administration we had regulators

that impose capital requirements well beyond the sea car, the tier one leverage ratios. these frameworks, are they being reviewed holistically to help support lending and economic growth? sec. bessent: we are not going to let outside regulators determine what is best for the system. the strength of the system is the depth and the breath, and we do not want to end up with canada with five banks and switzerland with three. rep. meuser: your decisive action to confront something that concerns us is the rampant government benefits fraud uncovered in minnesota. could you walk us through how treasury is using the authority to identify and recover proceeds and how minnesota is serving as a star for the national enforcement model? sec. bessent: there is a substantial amount of waste, fraud and abuse and americans and legislators on both sides of the aisle should be outraged.

when you are there and you see empty daycare centers, senior centers, and i personally met with two senators who have autistic children, and they are not getting their benefits. so, we are using our regulations to follow the money, which is what we have done whether it is mexican drug cartels, the mafia -- rep. meuser: i yield back. thank you for your work. chair barr: the chair recognizes the gentleman from new jersey. scott howard, you are recognized for five minutes. rep. roe: howard the 10-year treasury yield is running around the mid 4% range and mortgage rates are still above 6% keeping monthly payments i and pricing would be buyers out of the market. and it is increasing the homeownership gap in north jersey. how can we get the 10 year down and get homeownership more

affordable and that is what i am focused on. sec. bessent: the 10 year bond had its best year since 2020, and we actually had a fiscal contraction in the budget. the rest of the g-7 bond market went up in yields. so, -- rep. howard: you hope you will continue to see it move down? sec. bessent: i believe we can do that, and i believe we have all of the numbers. they say that what has been done with financial deregulation reaching two point 5 trillion of lending capacity into the u.s. economy. so, by creating more capacity there is less of a competition for scarce funds. so we are decreasing scarcity. rep. gottheimer: i have a strong belief that ai will revolutionize financial services and deliver meaningful gains for

customers and regulars and institutions if we do it right. the report strikes and encouraging balance highlighting the potential to improve resilience and efficiency while also noting the vendor concentration creates challenges. how is that threading the needle to enable adoption while encouraging competition and where can congress get this right though ai can flourish as a helpful tool for americans in the financial markets? sec. bessent: it is important to work together because what we see in these quick technology cycles is that the technology gets ahead of the regulation. so working together to keep the regulation in sync with the technology, whether it is for the financial system or for anywhere else. and there is good news as you said, it will change the interactions. the bad news is that it gives whether it is state actors or independent actors, more tools. rep. gottheimer: what are you

doing internally on the treasury. you spend a lot of time on the security side of the treasury piece. what are we doing on that? sec. bessent: we have both at treasury and then bringing in the private sector partners regularly, we do tabletop exercises in terms of what would happen if a actor got into the system and how can we reinforce that, and as you may have read before i arrived, treasury itself was hacked. we believe, a state actor. so again, increasing resilience, being aware and working with our private sector partners. rep. gottheimer: we are also seeing combinations of factors that make mark kirk -- markets nervous. even if there are multiple drivers, those moves are interpreted as investors seeking protection against policy uncertainty or concerns against monetary credibility and early signals of global capital

demanding a higher confidence premium. our markets pricing in a sustained shift away from u.s. assets you believe and what are the indicators to see if we are seeing that pullback? sec. bessent: so what we see at treasury is we saw a record amount of foreign inflows that despite -- despite the popular narrative we saw a record amount of foreign inflows into treasury auctions last year. this year many of the auctions have traded through the prevailing price before the auction. so, we are still seeing very good flow. and, we are still seeing massive flows into u.s. equities, and as several of the congressmen have said, we have seen substantial foreign direct investment. rep. gottheimer: one of the things we are concerned about is that disney saw fewer international visitors. the u.s. saw 6% fewer visitors despite laura -- global tourism

revenue rising. even at the great jersey shore, the 2025 beach revenue was down. what is the plan to calm volatility and tariff policy has been part of it. sec. bessent: on some things there is nothing we can do. if the premier of british columbia or ontario wants to be especially hostile and tell people not to come to the u.s. that is a decision. i will say that is their loss. rep. gottheimer: do you think we will see less volatility with the tariff policy firming up? sec. bessent: well, less volatility in tourism? chair barr: the gentleman's time has expired. the chair recognizes the gentleman from indiana. >> thank you mr. chairman and secretary. i am going to yield to the chairman briefly for a couple of questions. chair barr: mr. secretary, i appreciate the members on the republican side allowing you to clarify points on key distrust

-- discussions back and forth and we have had some good ones today. there is an exchange you had with my friend from massachusetts about artificial intelligence. in your capacity as chair, our view is that artificial intelligence offers great promise for better consumer service, fighting fraud, more accuracy in providing customer service, but also in providing a more robust compliance process with the rules in banking and brokerage and security is. i wonder if you could talk from that point of view about a philosophy of overseeing out of -- artificial intelligence in the financial services industry and among the supervisors of the financial services industry? sec. bessent: again, we are working with our private sector partners to best practices, and

chairman, as you said there are two pieces today is. there is service improvement, which was over at the irs, we hope to use artificial intelligence to get the customer wait times down and service down. on the other side, financial security, alerting everyone to the risk of what is going on, but this is a transformative change. as i mentioned to the congressmen, we look forward to working with you on legislation to make sure that the technology does not move too far ahead of the legislation. chair barr: i yield back to my friend from indiana. >> first of all, thank you for being a steady voice. our economy has seen tremendous growth. is there volatility? absolutely. we have heard a lot from my colleagues across the aisle

about tariffs and the effect on inflation in the u.s. economy. i just want to remind everybody that during the biden administration grocery prices increased by 23%. we have seen it. that growth accounted for nearly 91% of grocery price increases since january of 2021. invited's -- in biden's first year loan they increased as opposed to the 1.9% in president trump's first year in office and yet my colleagues want to blaine trump's tariffs for the prior administration's excessive spending. and i know that what the administration and the trump administration and you are doing, the america first policy is spot on. we have needed someone in the white house to fight for america first. so i want to say thank you from folks in northeast indiana for your hard work. to reset the table globally.

we are a manufacturing and agricultural sector. we grow the food for the country and we manufacture medical devices and all of these other things. i want to say thank you for that. sec. bessent: just to tell you, i was with the president in iowa, to combine two of your themes, manufacture tanning -- manufacturing and the account -- and the farm economy. the ceo of john deere is building a new factory in indiana and north carolina and the president said what made you do that and he said the tariffs. rep. stutzman: i mean, this is really putting manufacturing in a position to compete with china, whether it is a cnc shop, or the medical device industry. there are obviously pieces they are with the regulatory environment. but it is giving manufacturing a spot. one thing i would ask, i had a

foundry owner in an office and there are some definitions around foundries. i would like to send that information over to your office to take a look at it. it is an industry important for america and i know that you care very much about manufacturing and the steel industry. i will send that over. anyway. my time is about to expire, but i wanted to say thank you. let people back home are really dealing with is this cost of the last five years. and for you to reset the table, they believe in america and we need to show them that we believe in america as well. sec. bessent: there is a level and rate of change. the level is difficult to get down, but we have slowed the rate of change. rep. stutzman: i yield back. >> the gentleman from michigan is recognized for five minutes. >> mr. secretary, a bank leverage ratio is important, correct? sec. bessent: there are numerous

leverage ratios, which one? >> if i may i am going to submit the semiannual update, for the record, may i? >> without objection. >> i want to talk about the way that we look at global systematic important banks. that is what i'm talking about. they are banking organizations that could trigger a financial crisis if they failed, correct? sec. bessent: they could trigger a financial crisis for not lending. >> the leverage ratio is important. sec. bessent: i am looking -- >> i am looking at this chart that says tier one capital, does that help. so i know it is kind of hard to see, but the green line is that community banks and you see how high the cushion is, it is almost 11%? i know you cannot see it is fine i was going to end -- enlarge it. the largest bank capital

analysis for the federal reserve bank of kansas city shows that last year the chair one leverage ratio was at 10.1 3% but the banks that caused thethere -- tt 5.8%. that is a huge difference? sec. bessent: correct. rep. tlaib: i am getting there, i promise. do you think the largest and most complex banks are roughly half as risky and the threat that they pose to the financial system as a community bank in my district? sec. bessent: i think that what you are neglecting to think about is composition of the assets and the capital. the castable -- the capital at those larger banks could be more liquid while the banks in your community are much more as we are used to seeing in the movie is.

rep. tlaib: i understand. community banks lend out equivalent of 75% of their deposits to the real economy. some people refer to it as main street and we call it the real economy. the largest banks only lend about 40% of their deposits into the real economy. instead they rapidly extend loans to private equity that they can liquidate and is that what they are saying? sec. bessent: i am saying that they hold a much higher -- rep. tlaib: but the big banks are the ones who keep failing? sec. bessent: no. many small banks. rep. tlaib: because they are getting pushed out and we are not supporting community banks. sec. bessent: i think i said more than one hundred times today i support community banks. rep. tlaib: you can say it but you have to do something about it.

i know, but this is pretty bad. because the fact that community banks are expected to have almost twice as capital percentagewise content -- compared to banks that pose a largest threat to our financial sects -- system shows how much the title has tilted towards wall street, you understand that. that is where the risk is. the banks do -- the big banks do far less for the economy. the regulators recently released a rule to modify the supplementary leverage ratio that applies to the largest banks, and many former regulators and experts have warned that such a step will actually undermine the safety and soundness of our largest banks. it will result in a reduction of 219 billion and 28% in capitals of bank subsidiaries of global systematic important banks. my residents do not know this but they end up paying the cost when they fail. i am just trying to stress to my

colleagues how important it is because last november didn't regulators reduce it again, the capital requirement, yes or no? sec. bessent: congresswoman, i want to be polite when i say this, but much of the excess capital has been invested into the u.s. treasury market and keeping those yields low helps give borrowers who want a mortgage or a small business or an agricultural loan. sec. bessent: are you paying attention -- rep. tlaib: are you paying attention and it is really low. isn't it low? don't you agree that it is low? sec. bessent: it is not relative to the historical level. rep. tlaib: if you came to my district into detroit or the suburbs and we will tell you that the big banks do not loan to them and if they do it is predatory and it is not supportive and it is a local sump -- banks. >> your time is expired. the gentlelady's time is

explored you. the representative from california is now recognized. >> sec. bessent it is great to see you. i want to thank you so much for working very closely with me on delivering the history real -- the historic salt relief to the tune of $40,000. with that my constituents in orange, riverside and san bernardino counties will see the relief as they filed their own tax returns. the four times increase in the salt reduction coupled with other traditions of the working families tax cut act will result in supercharged tax returns, helping more american families get back on their feet after years of failed biden makes -- bidenomics. last year you said that the treasury would revisit the guidance and framework and

highlighted that they have other tools such as issuing recommendations to member agencies that are more tailored and precise than designation powered. so, can we expect a new proposal for non-bank guidance that would be released sometime in 2026? sec. bessent: we should expect that. rep. kim: i look forward to seeing that proposal when it is finally released, and hope there will be a public comment period to ensure that stakeholders can weigh in and help shape that guidance. sec. bessent: and the other thing that i would point out is we had a lot of talk about affordability today. and you were a great advocate for the one big beautiful bill. and what we are seeing unfortunately in states like yours that the state revenue authorities are not going to mirror the no tax on tips for the tax on overtime on social

security and the deductibility of auto loans. that is very unfortunate. so, to the extent that anyone in the california debt allegation, whether democrat, republicans or the new york delegation should push their states to provide that for working americans. rep. kim: you can count on me for that. i want to focus on the community development institution fund. i was really happy and relieved to see the staff at the fund were restored after the conclusion of the schumer shutdown late last year. i know that you share my view that the fund's work is critical to serving communities that typically do not receive their traditional banking services. can i ask you how you are planning to make the fund more effective and efficient as we move forward? sec. bessent: what we want to do

is focus on community revitalization, not social policies. we want to drive reforms and new restrictions on the use of funds and focus on the statutory intent. and making lives better for people in their communities. rep. kim: the cvf fund has bipartisan support, and i think also has bicameral support so i look forward to working for -- working with you on the future of this critical program. i also want to talk to you and thank you for being willing to come to california, and investigate all of the fraud, waste and abuse. unfortunately gavin newsom tried to hide all of those fraud and waste under the carpet, allowing more than 32 million dollars of unemployment fraud that went unchecked. the state has watched $13

million stolen from students because of the ai generated ghost students enrolled in community colleges. so, i suspect that this is the tip of the iceberg in california's fraud waste and abuse and i have been talking a lot about this. unfortunately, the state that i love, live, and represent a district from has become the fraud capital of the world. it is sad. that is why we need your team in california. is there anything that you can share to that end of how your investigation into california or fraud is proceeding? sec. bessent: there is nothing i can share right now, but i have spoken to dr. oz and he is laser focused in california and that seems to be substantial. rep. kim: i sent a letter to gavin newsom and i am glad to see a letter demanding and the

state of california is in the process of returning $1.6 billion to the federal government. thank you for that and i look forward to working with you. thank you for joining us. >> the gentleman from new york is represent -- is recognized. rep. torres: does the president have the constitutional authority to remove the chair of the federal reserve or a member of the group touch the board of governors solely because of a policy disagreement? sec. bessent: i am not a lawyer. i do not have an opinion. rep. torres: you have no opinion on whether the president can remove a board member at well? sec. bessent: i believe that the board member has committed -- rep. torres: i am not asking about a particular case. i am asking about the general authority. do you believe that the unitary executive theory applies to the federal reserve? sec. bessent: again, i think we will have to wait and see what the supreme court says. rep. torres: what is your opinion? sec. bessent: i am old -- i'm not a lawyer.

and there are varying opinions in the ministration. rep. torres: what is the prevailing or official opinion? do you consider the federal reserve an executive agency or legislative agency? sec. bessent: independent. rep. torres: it sounds like you do have an opinion. sec. bessent: we will see. i do believe that the federal reserve has to maintain credibility and be the -- beyond reproach. rep. torres: and undermining the independence. i know you are new fan of the " new york times," let me reclaim my times. "the wall street journal" published an article with the public -- following headline. "trump claims factory construction is up contradicting u.s. data" and the article notes that "president trump claims that factory construction is up

41%, a number that does not appear to be supported by the government's own data." one of the stated policy is to bring back manufacturing jobs but since the terrace of april 2020 five, we have seen the net loss of manufacturing jobs. do you know how many jobs have been lost since april of 2025 under your watch? sec. bessent: a couple of things. manufacturing operates with long leads. rep. torres: what is the number? sec. bessent: 67,000. rep. torres: 70,000. let me proceed. i'm going to reclaim my time. i am to reclaim my time. the purchasing manager's index measures whether manufacturing is expanding rather it is contracting or expanding. since the so-called liberation day tariffs of april 2025, has the pmi been mostly above 50 or

below 50? sec. bessent: we just had the biggest increase in over a decade and we are well above 50 now. rep. torres: has it been mostly above 50 since april 2025? sec. bessent: again come along invariable leadtimes in manufacturing may represent -- rep. torres: since april 2025 per how many months has the pmi been below 50? sec. bessent: where are we now? rep. torres: i will give you january went up, but what about april to december? it was below 50 for nine consecutive months. the score is nine to one. nine months of manufacturing contraction. sec. bessent: i look forward to seeing you next year. and we will keep score. rep. torres: one of the stated policy objectives of tariffs is to bring back domestic production. does the trump administration regret imposing tariffs on goods that cannot be produced domestically at scale in the united states?

do you realize in hindsight that was foolish? sec. bessent: do you realize we used the leverage to bring down tariffs mother countries to on non-tariff barriers? rep. torres: do tariffs on bananas give you leverage? sec. bessent: yes, with colombia, with brazil. i think you are being very naive with negotiating. rep. torres: a tariff of bananas did not lead to domestic banana production. it simply may bananas more expensive for consumers. sec. bessent: it has led to negotiating in a more fulsome manner. rep. torres: are you going to commit to no longer imposing tariffs on any products that has neither a domestic -- or national security rationale? sec. bessent: that would be foolish. rep. torres: you are willing to impose tariffs on goods we cannot domestically produced and have no national -- what is the national security nexus of bananas and coffee? sec. bessent: why we should do

that, there are numerous things when you negotiate -- they're only things that are made in indonesia, but the indonesians brought down their tariff barriers. rep. torres: we have to make bananas great again, i get it. 4 >> the gentleman from new york is now recognized for five minutes. >> thank you. first of all, i was one of the people you were in negotiations with over salt last year and i really appreciate the hard work and commitment in helping us get across the finish line and a lot of my constituents -- sec. bessent: i can tell you also the irs chairman that the second largest refunds are going to come from your constituents, or go to your constituents because of the salt deduction. >> it is going to be great, and like myself, the rest of my constituents are going to plow that back into the economy when they get the refund this year. thank you for all the hard work you have done there. last year you oversaw treasury's

efforts to implement trump's executive order to phase out paper checks, culminating in a more fraud-prone process. ver directed the treasury department to work with financial institutions and other stakeholders to address financial access for un-banked and under-bank populations. can you share more on the work stream and particularly how treasury plans to incorporate digital technologies or payment solutions to increase financial access for un-banked americans? sec. bessent: we are trying to bring them into the financial system and one of the ways is over these individuals' phones. what we have seen especially for the cohort you described is, they are especially susceptible to the paper checks. they may not have fixed addresses or the addresses may

not be secure. someone from the delegation in staten island brought this to my attention for her district. rep. garbarino: i think the administration has made serious strides to modernize our financial system through these initiatives. are there other ways treasuries looking to safeguard against improper transactions? sec. bessent: as we have done in minnesota, we have found a substantial amount of waste, fraud, and abuse. our geographic targeting, we have pushed on the threshold for services which are non-banks. and we want to know if you are wiring money out of the country that are you on public benefits? because one of two things must be true. you are receiving more public benefits then you need, so you can wire it back home, or you have stolen the money.

rep. garbarino: is there anything treasury is working on, any payment modernizations you are working on right now? sec. bessent: we are constantly working on payment modernizations. we are working with the fed to modernize. we are looking at ways on digital assets also. rep. garbarino: i'm going to switch gears. any other member has constituents. you can't plan for those, whether it is a national disaster, medical emergency, your spouse working at home, a lot of people don't have savings accounts, so they have to rely on short-term credit to cover basic expenses. would you agree that access to credit can be a critical lifeline for millions of americans, particularly middle income households? sec. bessent: yes.

rep. garbarino: what actions is the administration taking? sec. bessent: again, we believe that some of the financial deregulation we have done, especially for community banks, this will lead to more credit for communities rather than the money coming from a credit card agency. rep. garbarino: as chairman of the homeland security committee cybersecurity is one of my top priorities. can you describe what the administration is doing to strengthen cybersecurity across financial regulatory agencies, particularly in light of last year's breaches at occ and cfpb that had information leaked? sec. bessent: the treasury, we are committed to making risk-informed resources.

constantly assess emerging threats and are in close collaboration with our financial and sector partners as a push and pull. we recently had a group of them into treasury for very large conference on best practices, sharing with each other, sharing with us, and we have used that and our convening ability. chair hill: the gentleman's time has expired. sec. bessent: we have -- we have identified it as a stability concern. >> the chair recognizes the gentlewoman from texas, ms. garcia. rep. garcia: mr. secretary, earlier in response to someone else's question you talked a little bit toward the end, but i'm not sure that there was time for follow-up about, i think you said 10 to 20 million immigrants that are responsible for the driving up of housing costs. is that what you said? sec. bessent: i'm referring to a report, yes.

rep. garcia: do you know what they based it? what information they looked at? sec. bessent: the survey community by community. i will have people posted on the treasury x account as we speak. rep. garcia: thank you for the cooperation. the average new home sale is about $500,000, and you are saying it is driving up the housing crisis when dhs is over there trying to pick up people. they are a drain on society, depending on public benefits. if you are on public benefits how do you afford a $500,000 house? sec. bessent: let me clarify your confusion. rep. garcia: i'm not confused here. don't be demeaning to me. i'm going to object and ask the chairman to make your answer questions. sec. bessent: anyway, i'm trying to explain to you that it is rental income. rep. garcia: have you been to

the rental places of immigrants? i have people in my district who are in rental houses that i wouldn't rent to anybody. they are not expensive. there probably $500 or $600 a month. you think people that can really afford housing like that, that that is the housing we are talking about when we talk about the housing crisis? sec. bessent: d properties push up the price of c properties. so, it moves up the stack and if you think somehow the laws of supply and demand do not apply to housing, i would say you are incorrect. rep. garcia: no, i'm not incorrect. the only thing we might say about immigrants is we don't have housing because there is a shortage of labor supply because they build the houses and you are more focused on reporting them then having them stay here and build. mr. chairman, i would like to

introduce three items to the record. how the ice cracked down impacted minnesota's economy and the price of cruelty, how trump's mass deportation agenda endangers all. >> without objection that will be put in the record. rep. garcia: do you have any idea how much we are spending on ice every single day? sec. bessent: representative, this is financial stability oversight commission. rep. garcia: you are the treasurer. we were supposed to follow the money. you're always talking about follow the money. have you followed the money? they occupy cities, terrorize communities, and try to break up our country. sec. bessent: again, president has secured the border. rep. garcia: well then, let them stay at the border. i disagreed with you, and i

think you are confused. i think you are confused, but let me ask about something else. maybe you will answer this one. he also recently announced the formation of household resilience working group that will focus on financial conditions. american households across the country, especially in my district, have experienced firsthand the destabilizing effects of climate disasters. property insurance companies are leaving texas, california, florida, and many other states because of growing climate risk. i myself have felt the impact. what if anything are you doing to address the risk to households of mortgages and other forms of credit becoming unavailable in certain regions of the country due to climate change? sec. bessent: again, congressman, are you familiar with alw 24?

it was the base for everything that was done with climate and with all of the post-climate legislation and it has been discredited. everything that it previously did based on climate -- rep. garcia: who discredited it? sec. bessent: nature magazine has retracted the economic commitment of climate change more than 18 months after first learning the paper was fatally fraught -- lot, with errors too substantial for correction. rep. garcia: we are relying on a nature magazine to determine public policy? chair hill: the gentlewoman's time has expired. i would invite the secretary to respond more. rep. garcia: i would like that response in writing, thank you. chair hill: yes, we will have those answers to you in writing. the gentleman from wisconsin, mr. fitzgerald. rep. fitzgerald: i appreciate all the work you have done. and certainly look forward to

working with you in the future. i did have just a couple of questions. in many ways the cfc's are far less risky than they were before the financial crisis. one of the reasons has been that the credit risk transfers, those programs. some industry experts are concerned that the crt program is been significantly diminished and focuses on capital arbitrage instead of the real risk reduction. can you in general discuss the importance of the crt with the importance of the ensuring that they are transferring a significant amount of credit risk to the private market and avoiding the risk that the taxpayers take on? sec. bessent: the credit risk transfer is very important. and the attendant agencies, the

members, we closely monitor to make sure that there is no daisychain effect, that the quality of the risk transfer is at least as high as the entity from which it was logged. we saw in the gmc was a complete -- complexity can create a daisychain. we want is transparency. i think crt's are very important, but they cannot be opaque. rep. fitzgerald: very good. you called for a fundamental reset of financial regulation and emphasized, the treasury's active role in promoting more efficient, effective, and appropriately-tailored regulation. while we have seen progress in tailoring the supervision, can you tell us overall how you have tried to move the entire department in that direction?

sec. bessent: again, i have convening power and so that would be -- what you are describing would be done by the federal observed -- federal reserve regulatory body. vice chair bowman has done an excellent job with control over the currency. we have tried to give them a line in what they're doing, and for tailoring, and to understand the reason 50% of small and community banks have disappeared over the past 15 years has been because of a one-size-fits-all regulatory strategy which clearly does not. rep. fitzgerald: very good. keep up the good work and i yield back, chairman. chair hill: the gentleman from wisconsin yields back. the chair recognizes miss williams. rep. williams: thank you for having this conversation today and thank you, mr. secretary, for joining us. you noted in your introductory

letter to the 2025 f stock report that the council had formed a new household resilience working group that will focus on american household's financial conditions. the congresswoman for atlanta, i'm here to make sure that includes all families. as you noted, financially-resilient households can better withstand shock, maintain a central consumption, and avoid costly debt cycles. discrimination in lending or investment impact growth opportunities for black-owned small businesses, means discrimination, is a threat to american financial stability. atlanta has the largest racial wealth gap in the country. supporting entrepreneurship and access to capital within the black community can help close that gap. but i need your help. small businesses like those in -- are critical to building and maintaining household wealth. from 2017 to 2022 the number of like-on businesses surged,

representing over half of all new employee businesses. in 2022 black-owned firms added 200 and $20 billion in revenue to the economy and paid over 61 billion dollars in salary. broadly, over the last 10 years minority business entities comprised approximately 50% of new businesses started in the united states and created 4.7 million jobs. according to the u.s. census there are over 9.2 million minority-owned companies in the u.s. employing 8.7 million workers and generating more than one point $8 trillion in annual revenue. however, there is significant barriers to sustainability and growth of black entrepreneurship. that is why i launched the small business advisory council, to hear directly from small business owners in my district. because access to capital, as we heard in all of the conversations, continues to be one of the biggest challenges

the small business owners face. the first major hurdle for black entrepreneurs is a lack of startup funds, equity, and collateral. a result of the racial wealth gap. during the biden administration the agency developed $7.1 million in funding through its business centers and capital readiness program. but president trump signed an executive order continuing the reduction of the federal bureaucracy, erecting the destruction of the minority business development agency. what steps has f stock taken to assess the impact of discriminatory lending on like small business owners and the stability and growth of the economy overall? how does f stock factor discriminatory investment practices into its assessment? sec. bessent: again, we do not view that as a financial stability concern, but i do view it as a concern, and as i

repeatedly said, that we would be willing to work with you on tailoring for banks in your community, to give them more lending power, because what we have seen is that when 50% of the small banks have disappeared, i don't have empirical data, but i can tell you that my strong hunch would be that many of those would have been minority banks, so we would like to see more de novo banks, whether they are in black communities in atlanta, there they are in latino communities, whether they are in asian communities. rep. williams: you don't think dismantling the development agency has any impact on the economy at all? sec. bessent: again, very difficult to tell in a variable economy what impacts, whether it is good or bad or the aggregate versus the individual. rep. williams: i'm here to be

the voice of the people that sent me here and i would love to introduce you to some of the small business owners that have been in acted by this dismantling. also in the 2025 f stock report it placed a premium on regulation and demonstrates the administrations optimism about the use of ai. as you noted, ai coming used properly, can provide benefits to financial institutions by enabling them to provide services cheaper, faster, to a broader set of customers and under varied economic conditions. for example, currently some lending institutions are using ai to evaluate customer's credit worthiness. i see my time is about to expire, but my question is, what proactive steps does f stock recommend regulators take to combat lending the -- lending discrimination which may be compounded through the use of ai? chair hill: the gentlewoman's time has expired. rep. williams: i would love that answer. chair hill: we invite the

secretary to respond to your question in writing. thank you both. now recognize the gentleman from new york, mr. lawler. rep. lawler: thank you, mr. chairman. thank you for your leadership in helping get the working families tax cut bill across the finish line and in particular thank you for negotiating over the issue of salt, state and local tax deduction. there was a big win for the american people. the core goal of u.s. stable coin policy is to keep dollar -denominated stable coins issued. here in the united states rather than offshore. today a substantial and growing share of the dollar stable coin market operates outside the u.s. as foreign jurisdictions move to establish legal regimes that encourage dollars stable coin issuance in their markets. foreign-issued stable coins already compete globally by

offering consumers economic value and incentives to be used and hold them in countries like china and they are actively using economic incentives to drive adoption of their digital currencies. as treasury implements stable coin legislation do you agree that u.s. rules should preserve enough flexibility for american issuers to remain competitive so dollar activities stays transparent and under u.s. oversight? sec. bessent: congressman, again, as i think you know, i used to have a house in your district. given the tax regime in new york i'm sorry i am no longer there. i hope it will come back. it is beautiful for the world. with stable coins i would say what we want is u.s. best practices. stable coins can go around the world and we are seeing, i believe we will see the adoption, especially in emerging economies or any other individuals who want to hold the u.s. dollar, but i think it is

paramount, as was done with the genius act, to put in u.s. best practices. rep. lawler: agreed. different topic. fraud scams by bad actors are estimated to affect 50% of american homes. representing about 20 million american households in total. given losses often a man -- amounted to hundred $75, they face meaningful financial harm. at the same time 37% of u.s. households cannot cover an emergency expense of over $400 with cash or savings. antifraud laws can be devastating to the average american. these losses can lead to missed debt payments and damage to credit scores, which in some cases prevent homeownership. we have seen a renewed focus on fraud by this ministrations with the announcement of things like the scam center strikeforce and i would like to encourage the administration to adopt an all of government approach to combating fraud and scams.

what role do you think treasury should play in fighting scams and fraud and does f stock -- does the committee have any initiatives planned for the coming year? sec. bessent: so, treasury was part of the group who took down the scam centers in asia. we were very focused on places like laos, like burma, like north korea. and the other side of that, congressman, is that it used to -- once the money is stolen not only has a u.s. citizen been hurt, but it is used for nefarious purposes. we are constantly monitoring that and we are working with our partners, because, as you said, ai can be both a benefit -- a blessing and a curse. we think properly-managed and rolling it out using private sector partners, we can cut down

on that shocking number. i was not aware of 15% of americans are subject to it, but we have also got to be careful, because it will make a line actors more able to pull off bigger scams. rep. lawler: continuing on that front, there has been a growing concentration of cloud and ai model providers and the risk that results in a small number of firms control infrastructure. how is of stock assessing the financial stability implications of this concentration, particularly in scenarios of an outage, cyber incident, or foreign-based vulnerability? and i had introduced legislation we had passed recently through committee, the remote access security act ended up passing the house with strong bipartisan support.

what steps is of stock-taking to make sure financial institution reliance on third-party ai and cloud providers does not expose the system term out access risks? chair hill: you will need to answer the question in writing, mr. secretary. gentlemen's time has expired. pursuant to the agreement, we will have one more question her, because the secretary has a hard stop at 1:30 p.m.. the chair recognizes the gentleman from san jose, california. you are recognized for five minutes. rep. liccardo: thank you for testifying before us today. i know in addition to your many responsibilities your duties as well are in managing. expressing concerns about alternative remittance systems, also known as formal value transfer systems. is that fair? sec. bessent: yes sir. rep. liccardo: there are many

concerns with these alternative systems, including a lack of documentation and anonymity. their own formality makes them attractive to money laundering. is that true? in fact, in particular chinese money laundering organizations have been effective at utilizing the systems to acquire access to u.s. currency in areas ways? sec. bessent: we are very focused on chinese money laundering organizations, which originally began as wafer chinese citizens to get money out of the country. as china clamped down on the leakage they morphed into partners with the mexican drug cartels, so we are very focused on all of that. rep. liccardo: i appreciate that and support that. i understand has been some research, including published by the government accountability office. sorry, a gao report in 2016 and other studies as well that found

that fines and obstacles to remittances are not very effective at stopping the flow of remittances through the aggregate, but tend to push these remittances way from legitimate companies and remit -- remittances systems into these alternative systems. are you familiar with that? sec. bessent: i'm familiar with the thinking. rep. liccardo: this administration last year imposed a tax on remittances. you are familiar with that? is that right? sec. bessent: i am. rep. liccardo: many residents of the united states the penry norm -- dependent on immensely on these remittances, and many cases to keep their families alive, because it is difficult to immigrate to the united states these days. you are familiar with the importance to so many residents of the united states to be able

have access to remittances? sec. bessent: i'm familiar with the difficulty. yes sir. rep. liccardo: i have residents in my district to have been waiting 20 years to get a green card and have been going through the legal challenges. there are many obstacles, it is fair to say. is that fair to say? sec. bessent: i don't know the specific instances. rep. liccardo: nearly 40% of my residence make silicon valley what it was and i can tell you their tales of getting through the system. you indicated "we will push to prevent anyone receiving federal government support funds from sending money overseas. is that right? sec. bessent: 100%. rep. liccardo: in reaction a policy at the cato institute said these kind of actions are building a legacy of financial surveillance and control.

do you recall that? sec. bessent: i don't read the cato institute, but i -- but i believe in surveillance further remittances that should not be remitted and we should also know where the money is going. rep. liccardo: if you agree that imposing obstacles may impose some of these formal mechanisms, don't you agree that undercuts our objectives in addressing money laundering? and illicit activity? sec. bessent: i disagree with taxes. rep. liccardo: but you administration and you supported that tax last year. sec. bessent: i disagree with your assessment that taxes can be a hindrance. rep. liccardo: don't you agree that taxes can alter behavior? sec. bessent: i would say that

they would choose the safest path. rep. liccardo: they may choose a less safe path of a costs more to use a safe path, wouldn't you agree? sec. bessent: anyone who has legitimate income, is in the u.s. legally, and is sending money home through gains where they have paid taxes would choose the safest path. rep. liccardo: unfortunately the data does not show what you suggest. it shows the opposite. we are encouraging money laundering through these actions. these obstacles and taxes are not helping consumers. chair hill: the gentlemen's time has expired. i want to thank treasury secretary bessent for his testimony. without objection, all members will have five legislative days to submit questions. questions will be forwarded to the witness for his response. sec., please respond no later than march 11 to our questions. his hearing is adjourned.

-- this hearing is adjourned.

mission. good morning and welcome to nasa's kennedy space center. i'm quivering, joining you from florida as we prepare for the upcoming launch of nasa's space x crew, 12 mission launch slated for no earlier than wednesday, february 11th. today is the crew's final media availability before launch. our crew, 12 astronauts are joining us virtually from quarantine ahead of their mission to